Enel Americas Annual Report 2017

Plain-text annual report

Annual Report Enel Américas 2017 Santiago Stock Exchange ENELAM New York Stock Exchange ENIA Enel Américas was initially established under the name Compañía Chilena Metropolitana de Distribución Eléctrica S.A. On December 1, 2016 the company changed its name to Enel Américas S.A. The Company’s paid-in capital on December 31, 2017 reached $6,763,204,424 and was represented by 57,452,641,516 shares. These shares are traded in the Chilean stock exchanges and in the New York Stock Exchange in the form of American Depositary Receipts (ADR). The main business of the Company is the operation, development, generation, distribution, transmission, transformation and/ or sale of energy in any of its forms or nature, directly of through other companies. The Company can also exercise activities in the telecommunications sector, provide engineering advisory in the country and abroad, and also can invest and manage its investments in its subsidiaries and associate companies. Total assets amounted to $20,168,990 thousand on December 31, 2017. Enel Américas controls and manages a group of companies that operates in the electricity markets in four countries in Latin America (Argentina, Brazil, Colombia and Peru). In 2017, net income attributable to the controlling company reached $709,043 thousand and operational income was $2,219,399 thousand. By the end of 2017, the Company employed 11,393 people through its subsidiaries companies in Latin America. Annual Report Enel Américas 2017 2 Annual Report Enel Américas 2017Contents > Letter from the Chairman ....................................................................4 > Enel Américas is Open Power .............................................................8 > 2017 Milestones ...............................................................................10 > Main Financial and Operational Indicators ........................................14 > Identification of the Company and Constitutive Documents ............18 > Ownership and Control .....................................................................22 > Administration ...................................................................................28 > Human Resources ............................................................................44 > Exchange Transactions ......................................................................54 > Dividends ..........................................................................................60 > Investment and Financing Policy for 2017 .........................................64 > Company’s Business .........................................................................68 > Investments and Financial Activities .................................................78 > Risk Factors ......................................................................................86 > Regulatory Framework of the Electricity Industry ...........................102 > Description of the Business by Country .........................................126 > Sustainability ...................................................................................148 > Schematic Table of Ownership .......................................................154 > Significant Events of the Company .................................................160 > Identification of Subsidiaries and Associate Companies .................166 > Responsibility Statement ................................................................180 Contents 3 Letter from the Chairman Dear shareholders, You are holding the Annual Report of Enel Américas S.A. corresponding to the year 2017. In this document you will find the main milestones of the Company in a year of intense activity, and in which we have made great progresses in the consolidation of our business strategy. Before going through some of these milestones, I would like to thank the Members of the Board of Enel Américas, whom in 2016 gave me their trust and responsibility to chair the Company, placing their confidence in my management. Their dedication, honesty, kindness and efficiency in their work have been crucial for the development of the company. 2017 was challenging and a year of intense work, in which every employee of the Company has made a contribution. I would like to acknowledge this gratitude to the executives, professionals, technicians and employees working in the different subsidiaries of the Company for their commitment and hard work. I particularly thank the Chief Executive Officer of Enel Américas, Luca D’Agnese, who has leaded successfully the most important private electricity company of the Region. The Company’s positioning has been the result of a conscious and ongoing effort that we are very proud of, but at the same time imposes the challenge of maintaining and consolidating this position in the long term. We will continue embracing this task through a rigorous work, and with special attention to the search of new opportunities that will provide continuity to the achievements carried out during 2017. 4 Annual Report Enel Américas 2017Industrial Growth In terms of industrial growth, 2017 was a very good year, because the Company increased its regulatory asset base in more than US$2,300 million, thus strengthening its development in the distribution business in the different counties where the entity operates in the region. We faced in Argentina the implementation of a new regulatory framework in the distribution business. This new institutionalism meant a major turnaround in the business opportunities that we have had in this country, opening new alternatives and the possibility to carry out important investments in the next three years for the improvement of the quality of the distribution networks. We also had a positive year in Brazil, mainly in the distribution business. In March 2017 the concession contract for Enel Distribución Río was renewed and improved, in line with the expectations of the Company. I would also like to highlight the industrial non-organic growth: this year in Brazil we completed the acquisition of the distribution company Celg, currently known as Enel Distribución Goiás, which perfectly fits in the growth strategy of Enel Américas, adding 2.9 million clients to our clients’ base. We are working in this company’s improvement and efficiency processes, which will contribute to accelerate the expected financial and operational results. Also in Brazil, in the generation business we acquired Volta Grande hydroelectric power plant, adding 380 MW to our installed capacity, along with the consolidation of our generation portfolio in this country. Meanwhile in Peru, we acquired 7.5% ownership of Enel Distribución Perú to our minority shareholders. The transaction was performed in the Lima Stock Exchange and amounted to the equivalent of US$ 80.5 million. Therefore our total shareholding reached 83.2% of the Company’s equity. This operation is part of our strategy of acquisition of minority holdings. In this growth drive, we continue the permanent search of new opportunities of acquisition in the Region, especially in those markets that offer greater development, stability and compensation opportunities. 5 Letter from the Chairman Efficiencies and Simplification of the Group Results of the period In term of results, despite the context of volatility that existed in the Region during the year, Enel Américas has showed great economic and financial strength and provided As we know, one of the key issues of our corporate strategy very positive results to its shareholders, both in terms of is the implementation of the corporate simplification plan. EBITDA and Net Income, in line with the commitments Therefore, and in line with our commitment announced in announced last year in the Strategic Plan. 2016, Enel Américas reduced its corporate structure from 43 to 34 subsidiaries. The Company’s EBITDA increased 21.3% during the period in relation to the previous year. The new result amounted to In order to reach such purpose correctly and with the US$ 1,127 million, representing an 11% growth compared objective of rationalizing and simplifying the corporate to the previous year. Isolating the extraordinary effects, structure in these countries, important transactions were such increase reached 33% in relation to the same period carried out in Peru and Brazil in 2016. Regarding the challenging efficiency plan announced by the company, which has been our priority since 2016, we can emphasize that during 2017 we materialized 102% of the efficiencies that were committed in the Strategic Plan 2016-2019, reaching US$364 million. 6 Annual Report Enel Américas 2017 Sustainability is the central axis of our business I would like to finish this letter by expressing my gratitude to the Directors, executives, professionals, technicians and employees of Enel Américas for their permanent dedication and efforts made in 2017. All of them have been an essential part on each step made by this Company. So now I invite you to renew our commitment to follow this path, to continue leading the industry and to make a We are convinced that the incorporation of sustainability positive contribution to the development of our company. policies to the business chain generates value, both to Thank you. the shareholder and to the company. In this respect, the progress made during 2017 has allowed Enel Américas’ projects to benefit more than 538 thousand people in the four countries where we operate. This work was also reflected in the two certifications received in 2017: the entry of Enel Américas in the Dow Jones Sustainability Chile Index and the FTSE4Good Index, representing world- Francisco de Borja Acha Besga level references in this field, and of which we feel specially Chairman proud of. As we have seen, our Company is going through a positive development cycle, with achievements that consolidate our growth and stability. This is without a doubt a cause for satisfaction, but at the same time means to assume great responsibilities at present and in the future, while maintaining our high standards of corporate behavior, and being able to combine competition, skills and ethics in the development of our business. 7 Letter from the ChairmanEnel Américas is Open Power The strategic concept of Open Power means openness to time in Enel, we have identified a “galaxy” comprised by the outside world, to technology and internally between a Vision that represents the great long term objective, a colleagues. In order to completely communicate to our Mission 2025 declared in five items, values that represent clients, our counterparts, the essence of a new and the DNA of Enel and ten behaviors that should inspire innovative Enel, it’s important to share this attitude of every person working at the company. Together we will openness inside the company. In order to create a common discover the Open Power galaxy. culture between the Group’s different realities, for the first ovation n In R e s p o n sibility I t i s c o m m i t t e d w i t h i n t e g r a t i o n , r e c o g n i z i n g a n d i m p r o v i n g A d o p t s a n d p r o m o t e s s a f e b e h a v i o r s I n i t ' s w o r k i t i s m i n d f u l t o g u a r a n t e e t h e s a t i s f a c t i o n o f t h e C h a n g e s i t ' s p r i o r i t y i f t h e c o n t e x t M a i n t a i n s c o m m i t m e n t s a s s u m e d , M a k e d e c i s i o n s i n i t ' s d a i l y S h a r e s i n f o r m a t i o n R e c o g n i z e s t h e c r e d i t P r o p o s e s n e w s o l u t i o n s a n d o f i t s c o l l e a g u e s a n d p r o c h a n g e s a c t i v i t i e s c a r r y i n g o u t b y b e i n g B E H A V I O R c o l l a a n d t a k e b o r a t i v e r e s p o n a c t i v i t i e s a n d a c t s i n d i v i d u a l d i f f e r e p r o a c t i c l i e n t s d o e s a n o n d t / v i d e s g i v e u c p o m m w h e n v c e o e l r s y c o l l e ( c u l t a g u u r e , t o i m p r o O b w i t t h a n s i b a d i n d e o s t p r r e e e n i l i t y m i n t o a c f o r t h e a l t h , s s e e t i o n o m n t r i k i n g a b n u d t e e g s v s e u e n , n e l t a d h s c e e n t s t h f a c i n a g t i m o b p r o v s t a c l t i n r , a g g w i t h e , d i s e e i t s s o c o n t r i b r f a i l u e f fi c i e a b i l i t y , p a f e t y a n d f o r e x c p a s s i o n n c y a n d e r s o n w e ll - b e ll e n c e r e s s p e e d e i n g a li t y , e t c .) w it h o t h e r s u t i o n 8 S E VALU O p e gre n P o w ate st c h e r t o V I S I O N alle o v e n g e r c o s f a m e c i n s o g m t h e e o f w t o h e r l d T r u s t s e i g o l o n h c e t w e n o t y g r e n e f o d l r o w e h n t e p O y g r e n e e g a n a m o t e l p o e p r o s f y a P r o a ctivity N SIO MIS y erg n w w e n n s hip ers e p O artn Open new p Open new uses of e e r g y a ccess to m ore people n n e e p O Annual Report Enel Américas 2017 S E VALU O p gre e n P ate o w V I S I O N st c h e r t alle o o v n g e e r c o s f a m e c i n s o g m t h e e o f w t o h e r l d T r u s t s e i g o l o n h c e t w e n o t y g r e n e f o d l r o w e h n t e p O y erg n y g r e n e e g a n a m o t e l p o e p r o s f y a w w e n n e p O hip ers artn s Open new p N SIO MIS Open new uses of e e r g y a ccess to m ore people R e s p o n sibility P r o a ctivity n n e e p O ovation n In I t i s c o m m i t t e d I n i t ' s w o r k i t i s w i t h i n t e g r a t i o n , r e c o g n i z i n g m i n d f u l t o g u a r a n t e e t h e P r o p o s e s n e w s o l u t i o n s R e c o g n i z e s t h e c r e d i t o f i t s c o l l e a g u e s s a t i s f a c t i o n a n d i m p r o v i n g o f t h e c l i e n t s i n d i v i d u a l a n d d o e A d o p t s a n d p r o m o t e s s a f e b e h a C h a n g e s i t ' s p r i o r i t y i f t h e c o n t e x t M a i n t a i n s c o m m i t m e n t s a s s u m e d , M a k e d e c i s i o n s i n i t ' s d a i l y S h a r e s i n f o r m a t i o n v i o r s a n d c h a n g e s a c t s a c t i v i t i e s c a r r y i n g o u t b y b e i n g B E H A V I O R c o l l a a n d t a k e b o r a t i v e r e s p o n a c t i v i t i e s O b w i t o t h a d i m i n s p d e t o i l i t y a n s i b a n d p r o s a n o n d t / v i d e s g i v e u c p o m m w h e d i f f e r e p r o a c t i n v c e o e l r s y c t o l l e ( c u l t a g u u r e , e n , n n t s t h f a c i n a g t i m p r o v o b s t a e e c l s i t e g s s e u p r o v e r e e e n r m i n t o l t a c f o r t h e a d h s c e e t i n r , a g g w i t h e , d i s a l t h , s s e e t i o n n t r i o m k i n g a b n u d t e a f e t y f o r p a s w it h e f fi c i e a b i l i t y , p n c y a n d e r s o n a n d s i o n e x c e ll e e ll - b n c e s o w c o n t r i b r f a i l u r e s u t i o n s p e e d a li t y , e t c .) e i n g o t h e r s Milestones in 2017 JANUARY Enel Distribución Perú i n a u g u r a t e d p u b l i c lighting with LED lights Through an agreement b e t w e e n E n e l Distribución Perú and the Municipality of La Punta, this area became a pioneer in Peru using LED technology for public lighting. This system is much more efficient i n t e r m o f l u m i n o u s e f f i c i e n c y, a n d i t s duration is twice higher than any other traditional sodium lighting. 10 Enel Distribución Perú participated in a project to remove pollutant substances T h e M i n i s t r y o f H e a l t h i n Pe r u a n d t h e U n i t e d N a t i o n s Industrial Development Organization (UNIDO) a c k n o w l e d g e d t h e c o m p a n y f o r i t s active and volunt ar y p a r t i c i p a t i o n i n t h e Environmentally Rational Handling and Disposal of Polychlorinated Biphenyls (PCB) Project executed in the period 2010-2017. MAY The energy service o f B o g o t á w a s distinguished among the most competitive in Colombia Two reports issued by the Superintendence o f D o m e s t i c P u b l i c Services acknowledged that the energy service provided by Codensa in Bogotá is one of the most competitive in the country. During the first months of the year, the company remained as the second entit y with the lowest tariff per kilowatt/ hour and the second electricity distribution company with the best ser vice q u a l i t y i n d i c a t o r s i n Colombia. Emgesa is leader in energy sales through long-term contracts Emgesa is the generation company that recorded more transactions over 5-year term. Long-term contracts have enabled the company’s clients t o p l a n t h e i r e n e r g y m a n a g e m e n t m o r e e ff i c i e n t l y a n d fa c e c o n t i n g e n c i e s w i t h greater stability, such as El Niño phenomenon. MARCH Successful local bond issue of Codensa Codensa performed a successful bond issue in the Colombian capital market amounting to COP$ 430,000 million at 2 and 5-year term. This issuance was registered under the Bond Issuance and Placement program approved by the Financial S u p e r i n t e n d e n c e o f Colombia. Codensa and Emgesa p r o m o t e d e l e c t r i c m o b i l i t y t o t h e i r employees A s p a r t o f t h e i r c o m m i t m e n t w i t h electric mobility, Codensa and Emgesa created the ECO CAR program. This internal initiative facilitated employees t o a c q u i r e e l e c t r i c vehicles. In this first stage, 20 employees were benefitted with the acquisition of electric vehicles and received support and advisor y from the companies for the installation of i n d i v i d u a l ch a r g i n g points at their homes. A d d i t i o n a l l y, t h e s e companies installed five charging points in their headquarters for the use by employees during their working hours. FEBRUARY A p p r o v a l o f t h e Integral Tariff Review in Argentina O n F e b r u a r y 1 , i n Argentina the National Electricity Regulatory Entity (ENRE) approved the Integral Tariff Review, known as RTI, which established a structural change in the energy distribution sector in the country. Enel completed the acquisition of CELG (now Enel Distribución Goiás) On Februar y 14, Enel Américas, through its subsidiary Enel Brasil, completed the acquisition of approximately 94.8% o f C e l g D i s t r i b u ç ã o S.A. share capital. This company operates in the Brazilian region of Goiás. The amount of the operation reached BRL$ 2,187 million. Codensa announced a tariff reduction While the last milestone of the merger process of Empresa de Energía de Cundinamarca (EEC) with Codensa in Colombia, a n d a ft e r o b t a i n i n g the authorization for integrating the markets of both companies, since February 2017 a single tariff per kilowatt/ hour was applied for all clients of the merged company. Before this, the clients of EEC paid a higher tariff per kilowatt/ hour than the one charged by Codensa. Annual Report Enel Américas 2017Enel Distribución Perú convened an energy bidding The company convened generation companies to participate in the energy supply bidding for free customers for a total of 100 MW, for the period between July 2017 and December 2021. Through this public tender, Enel Distribución Perú chose among those generation companies that offered the most advantageous e c o n o m i c t e r m s fo r contracted capacity and energy supply of free customers. JULY Codensa and Emgesa were acknowledged f o r a n t i c o rr u p t i o n practices in Colombia The companies were r e c o g n i z e d b y t h e Presidency’s Secretariat of Transparency as one of the six large companies o f t h e c o u n t r y t h a t entered in the record of Anticorruption Active Companies (EAA in its Spanish acronym), with the highest international s t a n d a r d s i n t h e compliance of corruption prevention programs. B o t h c o m p a n i e s exceeded the essential requirements for entering the register of EAA, becoming references in anti-corruption practices and activities related with corporate ethics compliance in Colombia. Anniversary of Enel Generación Costanera E n e l G e n e r a c i ó n Cost anera turned 24 years of age, being one o f t h e m a i n t h e r m a l generation companies of the Group. This power plant is located in the southern seafront of Buenos Aires. JUNE Enel Generación Ceará received the Abradee Award For the eight consecutive times, the company was awarded with the first place in the Corporate Social Responsibility categor y by Abradee, the Brazilian Association o f E l e c t r i c a l E n e r g y Distribution. C o d e n s a c a r r i e d o u t a n i m p o r t a n t modernization plan of the energy substations With an investment of COP$ 160,000 million, Codensa moved forward its ambitious plan for the modernization of 27 substations in Bogotá and Cundinamarca and improved the quality of service for its 3,268,564 clients. These works were carried out without any service interruption and didn’t impact any clients. Codensa and Emgesa committed with new s t a n d a r d s i n t h e i r sustainability reports B o t h c o m p a n i e s p a r t i c i p a t e d i n t h e launching of new GRI S t a n d a r d s , w h i c h w e r e u p d a t e d b y the Global Reporting Initiative, which define t h e s t a n d a r d s f o r sustainability reports worldwide. The objective of updating of these rules is to adapt the companies to the Paris Agreement and to the Objectives of Sustainable D eve l o p m e n t o f t h e U n i t e d N a t i o n s . Th e Enel Group committed to specifically support four of them: quality e d u c a t i o n , a c c e s s to energy, economic development and fight against climate change. Successful local bond issue of Codensa for COP$ 200,000 million Codensa carried out successfully a bond issue in the Colombian market for COP$ 200,000 million a t 7- ye a r t e r m . Th i s issuance was registered under the Bond Issuance and Placement program approved by the Financial S u p e r i n t e n d e n c e o f Colombia. Milestones in 2017 11 Milestones in 2017 New power substation in Peru benefits more t h a n 2 5 t h o u s a n d clients Enel Distribución Perú commissioned the new Filadelfia Transmission Electric Substation (SET in its Spanish acronym), l o c a t e d i n t h e S a n Martín de Porres district. This service operates in 60 kV benefits more than 25,000 residential, commercial and industrial clients of San Martín de Porres, Los Olivos and Callao. The reliability in the electricity supply has improved in these districts. Additionally, it will meet the energy demand of the future Line 2 of Lima Subway. Investments needed for its construction and n e t wo r k i n s t a l l a t i o n exceeded 20 million dollars and were carried out during 15 months. SEPTEMBER E n e l A m é r i c a s wa s included in the Dow Jones Sustainability Chile Index For the first time the company became listed o n t h e D o w J o n e s S u s t a i n a b i l i t y I n d ex (DJSI) in the category DJSI Chile. This index looks annually at the performance of 2,500 large companies listed in the most important stock exchanges worldwide. Enel Américas became listed for the first time i n t h e F T S E 4 G o o d Emerging Index This index belongs to the FTSE4Good, and includes companies listed in stock exchanges worldwide that comply with the highest environmental, s o c i a l r e l a t i o n s h i p s and governance global s t a n d a r d s , b a s e d on the principles for responsible investment. The FTSE4Good criteria are applied to the FTSE Emerging Index launched in 2016, gathering 20 emerging countries. E n e l A m é r i c a s wa s awarded the concession to operate Volta Grande power plant in Brazil for 30 years The concession was granted in the public t e n d e r “ L e i l ã o d e C o n c e s s õ e s n ã o prorrogadas” arranged by the Brazilian federal government through the Brazilian Agency of Electricity Regulation (ANEEL for the Brazilian a b b r e v i a t i o n ) . E n e l Américas paid nearly B R L $ 1 , 4 2 0 m i l l i o n (equivalent to US$ 445 million), being in line with the current Group’s strategic plan. Edesur celebrates its 25th anniversary On September 1, Enel’s distribution company in Argentina reached the age of 25 and celebrated with its employees. With a total of 18 TWh/ year, Edesur ser ves nearly 2,5 million clients in the cit y of Buenos Aires and 12 municipalities in the southern area of the province of Buenos Aires. Only in 2017, the company invested ARS$ 4 , 0 0 0 m i l l i o n i n t h e electricity network. OCTOBER E n e l A m é r i c a s i n c r e a s e d i t s participation in Enel Distribución Perú O n O c t o b e r 4 , E n e l A m é r i c a s t h r o u g h its subsidiar y in Enel Perú SAC increased an additional 7.5% share in the share capital of Enel Distribución Perú. This transaction was performed in the Lima S t o ck E x ch a n g e f o r an amount equivalent to US$ 80.5 million. S u b s e q u e n t l y, t h e participation of Enel Group in the distribution company reached 83.2% of the company’s share capital. Codensa and Emgesa turned twenty years of operations Together with the Enel Group, Codensa and E m g e s a c e l e b r a t e d t w e n t y y e a r s o f ex i s t e n c e , i n w h i ch t h ey h ave d e c i d e d l y c o n t r i b u t e d t o t h e p r o g r e s s o f t h e energy sector and the d eve l o p m e n t o f t h e c o m m u n i t i e s w h e r e they operate, through the generation, distribution and commercialization of electrical energy. During t h e s e t wo d e c a d e s , t h e s e c o m p a n i e s h ave r e m a r k a b l e fo r being financially and socially responsible, for its environmental commitment, innovation and proximity with their clients. AUGUST Enel was awarded with the National Innovation Award in Brazil E n e l B r a s i l w a s recognized in the most important category of the National Innovation Award, organized by the National Confederation of Industry – CNI and the Brazilian Service for the Support of Micro and Small Companies (Sabra in its Brazilian acronym). The awards ceremony t o o k p l a c e o n J u n e 26 during the opening session of the Brazilian Congress of Innovation in São Paulo. Nearly 4 thousand companies register to participate and 34 of them were shortlisted. Enel was also one of the three finalists in the Innovation and Marketing category. Anniversary of Enel Generación El Chocón T h e h y d r o e l e c t r i c p owe r p l a n t o f E n e l Argentina, located in the Neuquén province, is a symbol of strength. El Chocón village grew and developed around t h e c o m p a n y t h a t contributes with 1,200 MW to the International Interconnected System. The concession was granted on August 11, 1993, and in 2017 turned 24 years old. 12 Annual Report Enel Américas 2017Pompeya Substation Edesur inaugurated the repowering works at the Pompeya Substation, benefitting 36 thousand clients. The company, s u b s i d i a r y o f E n e l A m é r i c a s , i n v e s t e d ARS$ 208 million. The c e r e m o n y c o u n t e d with the participation o f t h e g l o b a l h e a d of infrastructure and networks of Enel Livio G a l l o ; t h e g e n e r a l m a n a g e r o f E d e s u r Giuseppe Fanizzi; the Chairman of the company Juan Carlos Blanco and the country manager of Enel Argentina Maurizio Bezzeccheri. Enel Distribución Perú installs more than 8,700 smart meters in Lima and Callao Th e e q u i p m e n t wa s installed in seven districts at Lima and Callao as part of the pilot plan to create a more efficient and digitized electricity n e t w o r k f o r t h e improvement of quality of service. The company will carry out investments in this project for a total amount of US$1.1 million, including the installation of 10,000 meters by the end of the first quarter of 2018. The objective is to show the benefits of this technology and t o p e r f o r m a s m a r t management of energy to clients and to the whole power system. Substation Padre Novak The substation Padre N o v a k w a s b u i l t i n Florencio Varela area, one of the most important w o r k s o f E d e s u r t o relieve the area and improve transmission and distribution capacity. In October a new 40 MVA transformer and medium voltage wires were inst alled, thus improving the service to our clients and easing the demand of Varela Substation. Opening of machines in Costanera The tuning process of one of the combined c y c l e s o f E n e l Generación Costanera started, which is part of the maintenance of machinery for its optimal operation. NOVEMBER Emgesa won the award o f e x c e l l e n c e A R L SURA The company received t h i s r ewa r d s t h a n k s to the innovation plan based on improvements of lighting and facilities to install, operate and maintain public lighting at the Cartagena Power Plant Port Society. This project works with a retractable posts system that eliminates the risk of works in heights to employees that handle lights. Smart Meters Edesur begun to digitize the network with the inst allation of 5,0 0 0 smart meters. During N ove m b e r C a b a l l i t o n e i g h b o r h o o d w a s covered, one of the most densely populated areas. This new generation o f S m a r t M e t e r s allows the detection of interruptions in real time and to accurately measure consumption and the energy boost to the network. DECEMBER First charging station for electric vehicles in Argentina E n e l i n s t a l l e d t h e first charging station fo r e l e c t r i c ve h i c l e s in the countr y at the headquarters of Edesur. As such, the company reaffirmed its leadership in energy innovation, electric mobilit y and p r o t e c t i o n o f t h e environment. W o r k s o f e l e c t r i c infrastructure will take place in Villa Olímpica in Argentina T h e Yo u t h O l y m p i c G a m e s 2 018 w i l l b e h e l d a t V i l l a S o l d a t i neighborhood in Buenos A i r e s . Th e c o m p a ny i n s t a l l e d m e d i u m voltage lines and new transformer chambers fo r o n e o f t h e m o s t important sport events of the year. Installation of Smart Meters in Argentina 5 0 s m a r t m e t e r s were installed in Los Piletones neighborhood as part of a pilot plan, where a dining area of Margarit a Barrientos Foundation is located. As such, the company promotes technological p r o g r e s s i n a l o w - income neighborhood and cooperates with its development. Milestones in 2017 13 04Main financial and operational indicators 14 Annual Report Enel Américas 201715 Letter from the ChairmanTotal Assets 13,317,834 15,177,664 15,921,322 15,449,154 11,281,556 20,168,990 As of December 31 of each year (1) 2012 2013 2014 2015 2016 2017 Total Liabilities 6,354,065 6,670,199 7,642,104 7,259,346 6,006,307 11,890,483 Operating Revenues 6,577,667 6,264,446 7,253,876 5,301,440 5,197,286 10,540,327 1,982,924 2,251,489 2,300,020 1,615,112 1,643,369 2,947,261 377,351 658,514 610,158 661,587 383,060 709,043 0.99 0.91 1.31 0.78 1.23 0.92 1.01 0.65 1.25 1.14 0.92 1.44 As of December 31 of each year 2012 2013 2014 2015 2016 2017 501 20 3,652 11,207 11,852 197 13 987 5,183 7,291 517 30 2,914 13,251 16,304 263 25 1,657 8,570 9,587 1,478 88 9,210 38,211 45,034 628 25 4,522 14,422 16,549 200 13 987 4,992 6,826 563 29 2,925 12,748 16,090 316 27 1,842 8,489 9,497 1,707 94 10,276 40,651 48,962 645 25 4,522 14,390 15,276 208 13 987 5,225 7,108 589 32 3,059 13,559 15,773 324 27 1,949 9,062 9,916 1,766 97 10,517 42,236 48,073 657 25 4,522 15,204 15,770 194 13 987 4,398 6,541 484 36 3,459 13,705 16,886 292 27 1,983 8,801 9,283 1,627 101 10,951 42,108 48,480 632 29 4,419 13,124 13,312 185 13 974 3,665 9,448 551 36 3,457 14,952 18,015 310 27 1,934 8,698 9,800 1,678 105 10,784 40,439 50,575 578 29 4,419 14,825 14,852 146 17 1,354 4,034 12,587 604 34 3,467 14,765 18,156 320 27 1,979 7,430 10,457 1,648 107 11,219 41,053 56,051 Ebitda Net Income (2) Liquidity Ratio Leverage(3) Generation Business ARGENTINA Number of employees Number of generating units Installed capacity (MW) (4) Electricity generated (GWh) Energy sales (GWh) BRAZIL Number of employees Number of generating units Installed capacity (MW) (4) Electricity generated (GWh) Energy sales (GWh) COLOMBIA Number of employees Number of generating units Installed capacity (MW) (4) Electricity generated (GWh) Energy sales (GWh) PERU Number of employees Number of generating units Installed capacity (MW) (4) Electricity generated (GWh) Energy sales (GWh) TOTAL Number of employees Number of generating units Installed capacity (MW) (4) Electricity generated (GWh) Energy sales (GWh) 16 Annual Report Enel Américas 2017Distribution Business ARGENTINA Energy sales (GWh)(5) Number of customers Energy losses Number of employees Clients / employees BRAZIL Energy sales (GWh) (5) Number of customers Energy losses Number of employees Clients / employees COLOMBIA Energy sales (GWh) (5) Number of customers Energy losses Number of employees Clients / employees PERU Energy sales (GWh) (5) Number of customers Energy losses Number of employees Clients / employees Total Energy sales (GWh) (5) Number of customers Average energy losses Number of employees Clients / employees As of December 31 of each year 2012 2013 2014 2015 2016 2017 17,338 18,137 17,972 18,492 18,493 17,736 2,388,675 2,444,013 2,464,117 2,479,559 2,504,558 2,529,307 10.6% 2,948 810 10.80% 10.75% 12.30% 12.04% 12.04% 3,320 736 3,823 645 4,142 596 4,290 584 4,251 595 20,694 21,767 22,842 22,776 22,809 34,876 6,050,522 6,301,582 6,500,500 6,754,327 6,943,600 9,974,471 16.30% 16.10% 16.42% 17.30% 16.10% 15.22% 2,382 2,540 2,370 2,659 2,415 2,732 2,348 2,877 2,244 3,237 3,336 2,990 13,364 13,342 13,660 13,946 13,632 13,790 2,712,987 2,686,919 2,772,376 2,865,159 3,248,447 3,340,457 7.50% 1,127 2,407 7.00% 1,036 2,594 7.19% 1,043 2,658 7.30% 947 2,771 7.10% 1,337 2,430 7.84% 1,376 2,428 6,863 7,045 7,338 7,624 7,782 7,934 1,203,061 1,254,624 1,293,503 1,336,610 1,367,044 1,396,966 8.20% 607 1,982 7.90% 616 2,037 7.95% 619 2,090 8.30% 570 2,191 7.80% 620 2,216 8.24% 588 2,376 58,259 60,291 61,812 62,838 62,715 74,337 12,355,245 12,687,138 13,030,496 13,435,655 14,063,649 17,241,201 10.65% 10.45% 10.58% 11.30% 10.76% 12.30% 7,064 1,749 7,342 1,728 7,900 1,649 8,007 1,678 8,491 1,656 9,551 1,805 (1) Accounting figures are in accordance to the instructions and regulations issued by the CMF. Figures are presented in million Chilean nominal pesos for the years 2012, 2013, 2014, 2015 and 2016, and figures are in million dollars for 2017. The Extraordinary Shareholders Meeting held on April 27, 2017 approved the change of functional currency of the Company from Chilean pesos to US dollars. (2) Net Results attributable to the dominant company. (3) Total Liabilities/ Equity plus Minority Interest. (4) In contrast to the previous years, net installed capacity is considered for the years 2016 and 2017, and the difference with gross installed capacity is the discount for self-consumption. (5) Due to changes in the criteria, non-billable consumptions (CNF) are not included in 2014, 2015, 2016 and 2017. Main financial and operational indicators 17 05Identification of the company and constituent documents 18 Annual Report Enel Américas 201719 Letter from the ChairmanIdentification of the company Name or company name Enel Américas S.A. Domicile Type of company Rut Address Postal code Phones P.O. Box Santiago de Chile, being able to establish agencies or subsidiaries in other parts of the country or abroad Publicly traded company 94,271,000-3 Santa Rosa Nº 76, Santiago, Chile 833-009 SANTIAGO (56-2) 2353 4400 - (56-2) 2378 4400 1557, Santiago Securities Registration number Nº 175 External Auditors Ernst & Young Subscribed and paid-in capital (Th$) 6,763,204,424(1) Web site Email www.enelamericas.com comunicacion.enelchile@enel.com Investor Relations phone (56-2) 2353 4682 Ticker symbol in Chilean stock exchanges ENELAM Ticker symbol in New York stock exchange ENIA ADR’s Custodian Bank ADR’s Depositary Bank Banco Santander Chile Citibank N.A. Local credit rating agencies Feller Rate Clasificadora de Riesgo Limitada, Fitch Chile Clasificadora de Riesgo Limitada International credit rating agencies Fitch Ratings, Moody’s Investor Services y Standard & Poor´s International Rating Services (1) The Extraordinary Shareholders’ Meeting held on April 27, 2017 agreed the change of the Company’s functional currency from Chilean pesos to US dollars, and therefore the modification of the articles five permanent and one transitory of the Company’s by-laws. Constituent Documents The company that gave rise to Enel Américas S.A. On August 1, 1988, the company’s name was changed to was formed initially under the name Compañía Chilena Enersis S.A. Metropolitana de Distribución Eléctrica S.A. by public deed dated June 19, 1981, granted by the notary Patricio In April 2015 Enersis S.A. started a corporate reorganization Zaldívar Mackenna in Santiago, and modified by public process. As part of this process, on December 18, 2015 deed on July 13 the same year and in the same notary. The the Company’s Extraordinary Shareholders Meeting was company’s incorporation was authorized and its bylaws held, where shareholders of Enersis S.A. approved the approved by Resolution 409-S of July 17, 1981 of the first stage of the reorganization process called “the Spin- Securities and Insurance Commission (SVS). The extract of off”. Therefore, the Spin-off of the Company was approved, the incorporation authorization and approval of the bylaws and the entity “Enersis Chile S.A.” was created, which was registered in the Santiago Trade Registry on page represented the unique vehicle for the control of generation 13,099 Nº7,269 for the year 1981, and were published in and distribution assets that the Group owns in Chile and, the Official Gazette of July 23, 1981. The bylaws of Enel the former Enersis S.A. was named “Enersis Américas Américas S.A. have undergone a number of modifications S.A.”, which controls the businesses in the other countries ever since. 20 Annual Report Enel Américas 2017of the region (Argentina, Peru, Brazil and Colombia). The the Commerce Registry in 2016 of the Property Register Spin-off was formalized in a public deed of January 8, 2016, in Santiago and was published in the Official Journal on granted in the Notary Iván Torrealba Acevedo in Santiago, October 29, 2016. whose excerpt was registered on pages 4013 N° 2441 of the Commerce Registry in 2016 of the Property Register The Company’s purpose is to perform in the country in Santiago and was published in the Official Journal on or abroad the exploration, development, operation, January 22, 2016. A supplementary extract was registered generation, distribution, transmission, transformation on pages 10.743 N° 6.073 in the same Registry, year and and/ or sales of energy in any of its forms and nature, the Property Register and was published in the Official or directly or through intermediate companies, likewise, Journal on February 10, 2016. and also telecommunications activities and the provision of engineering consultancy in the country and abroad. It The Extraordinary Shareholders Meetings of Enersis may also invest and manage its subsidiaries and associate Américas S.A. and its subsidiaries Endesa Américas S.A. companies, whether generators, transmission companies, and Chilectra Américas S.A. were held on September 28, distributors or traders of electricity or whose business 2016. Among other topics, at these meetings the second is any of the following: (i) energy, in any of its forms or stage of the corporate reorganization plan denominated nature, (ii) the supply of public utilities or whose main raw “The Merger” was approved. Therefore, Enersis Américas material is energy, (iii) telecommunications and information S.A., the absorbing entity, acquired all the assets and technology, and (iv) trading over internet. In complying with liabilities of the subsidiaries Chilectra Américas S.A. and its main objects, the company will carry out the following Endesa Américas S.A., succeeding them in every right and functions: obligation and incorporating to Enersis Américas S.A. the entirety of shareholders and equity of Chilectra Américas a) Promote, organize, build, modify, dissolve or liquidate S.A. and Endesa Américas S.A. companies of any nature, which have similar corporate objects to its own. In addition, it was agreed that after the Merger, on b) Propose investment, financing and business policies to December 1, 2016, Enersis Américas S.A would change its subsidiary companies, as well as accounting criteria name to “Enel Américas S.A.”. Such meeting was formalized and systems that these should follow. in a public deed of October 18, 2016, granted in the Notary c) Supervise subsidiary management. Iván Torrealba Acevedo, whose excerpt was registered on d) Provide subsidiary or associate companies with the pages 79,974 N°43,179 of the Commerce Registry in 2016 necessary financing for their business development and of the Property Register in Santiago and was published in provide management services; financial, technical, legal the Official Journal on October 29, 2016. and auditing advice; and in general any type of service Corporate Purpose The corporate purpose of the Company is stated in the statutory modification approved by the Extraordinary Shareholders Meeting held on September 28, 2016, formalized in a public deed of October 18, 2016, granted in the Notary Iván Torrealba Acevedo in Santiago, whose excerpt was registered on pages 79,974 N°43,179, of that appears necessary for their best performance. In addition to its main objects and always acting within the limits established by the Investment and Financing Policy approved by the Shareholders Meeting, the Company may invest in: 1.- The acquisition, operation, construction, rental, administration, intermediation, trading and disposal of all kinds of movable and immovable assets, either directly or through subsidiaries or associate companies. 2.- All kinds of financial assets, including shares, bonds and debentures, commercial paper and in general all kinds of titles or securities and company contributions, either directly or through subsidiaries or associate companies. 21 Identification of the Company and Constitutive Documents06Property and control 22 Annual Report Enel Américas 201723 Letter from the ChairmanOwnership Structure Ownership structure The company capital is divided into 57,452,641,516 shares, with no nominal value, all holds the same single series and each share represents one voting right, and there are no state-owned preferred shares. As of December 31, 2017, all shares were subscribed and paid-in, and were distributed as follows: Shareholders Enel S.p.A. Pension Funds ADR´S (Citibank N.A. according to circular N°1,375 of the SVS) Foreign Investment Funds Custodian banks Stockbrokers, insurance companies, mutual funds Other shareholders Total Shares Number of shares Shareholding 29,762,213,531 8,606,567,373 5,064,445,978 90,124,898 8,605,676,521 3,795,006,987 1,528,606,228 51.80% 14.98% 8.81% 0.16% 14.98% 6.61% 2.66% 57,452,641,516 100.00% Identification of Controllers As defined in Title XV of Law No. 18,045, Enel Américas S.A. is a publicly traded company directly controlled by Enel S.p.A., an Italian joint stock company, owning 51.8030% of the shares issued by Enel Américas S.A. Shareholders of Enel S.p.A Ministero dell’Economia e delle Finanze de Italia BlackRock Inc. Other Investors (Institutional and Retail) Total The controller’s members don’t have a joint action agreement. 23.6% 5.6% 70.8% 100.0% 24 Annual Report Enel Américas 2017 List of the Twelve Main Shareholders of the Company As of December 31, 2017, 23,973 shareholders owned Enel Américas. The twelve main shareholders were: Name or Company Name Enel S.p.A. Citibank N.A. as per S.V.S. Circular 1,375 Banco de Chile on behalf of non-resident third parties Banco Itaú Corpbanca on behalf of foreign investors Rut Number of Shares Shareholding 59,243,980-8 29,762,213,531 51.80% 59,135,290-3 97,004,000-5 97,023,000-9 5,064,445,978 3,895,552,189 2,523,158,948 Banco Santander on behalf of foreign investors 97,036,000-K 1,883,016,703 AFP Provida S.A. for Pension Fund C AFP Capital S.A. for Pension Fund C AFP Habitat S.A. for Pension Fund C AFP Cuprum S.A. for Pension Fund C AFP Cuprum S.A. for Pension Fund A Banchile C. de B. S.A. AFP Habitat S.A. for Pension Fund A Subtotal twelve major shareholders Other 23,961 shareholders TOTAL 23,973 SHAREHOLDERS 76,265,736-8 98,000,000-1 98,000,100-8 76,240,079-0 76,240,079-0 96,571,220-8 98,000,100-8 1,305,331,772 981,480,577 959,169,297 853,871,456 496,246,910 495,159,971 467,088,142 48,686,735,474 8,765,906,042 57,452,641,516 8.81% 6.78% 4.39% 3.28% 2.27% 1.71% 1.67% 1.49% 0.86% 0.86% 0.81% 84.74% 15.26% 100.00% There are no shareholders representing the founding families of the Company neither related to the government or state entities owning shares exceeding 5% ownership. Property and control 25 Most Significant Changes in Ownership During 2017, the most important changes in the ownership of Enel Américas are the following: Name or Company Name Rut Dv Number of shares on 12/31/2016 Number of shares on 12/31/2017 Variation % Number of Shares Variation Citibank N.A. as per SVS Circular 1,375 Banco de Chile on behalf of non-resident third parties AFP Provida S.A. Banco Itaú Corpbanca on behalf of foreign investors AFP Capital S.A. AFP Cuprum S.A. Banco Santander on behalf of foreign investors AFP Habitat S A Banchile C.de B. S.A. AFP Modelo S.A. AFP Planvital S.A. Larraín Vial S.A. Corredora de Bolsa BTG Pactual Chile S.A. C. de B. 59,135,290 97,004,000 76,265,736 97,023,000 98,000,000 76,240,079 97,036,000 98,000,100 96,571,220 76,762,250 98,001,200 80,537,000 84,177,300 Banco Santander-HSBC Bank PLC London Client Account 97,036,000 Santander Corredores de Bolsa Limitada Valores Security S.A. C. de B. 96,683,200 96,515,580 3 5 8 9 1 0 K 8 8 3 K 9 4 K 2 5 5,631,047,778 5,064,445,978 -0.9862% -566,601,800 4,108,765,679 3,895,552,189 -0.3711% -213,213,490 2,623,011,837 2,278,366,257 -0.5999% -344,645,580 2,508,359,677 2,523,158,948 0.0258% 14,799,271 1,878,800,411 1,995,066,955 0.2024% 116,266,544 1,804,422,529 1,780,798,933 -0.0411% -23,623,596 1,696,564,437 1,883,016,703 0.3245% 186,452,266 1,481,560,005 1,797,479,247 0.5499% 315,919,242 450,500,908 495,159,971 0.0777% 44,659,063 289,374,853 468,847,590 0.3124% 179,472,737 286,867,719 286,008,391 -0.0015% -859,328 283,130,396 290,453,220 0.0127% 7,322,824 232,232,906 203,106,375 -0.0507% -29,126,531 219,688,777 198,136,422 -0.0375% -21,552,355 206,736,414 216,115,682 0.0163% 9,379,268 138,540,854 159,927,049 0.0372% 21,386,195 26 Annual Report Enel Américas 2017 Exchange Transactions Performed by Related Individuals during 2016 and 2017 No exchange transactions between related individuals were made during 2016 and 2017. Summary of Directors’ Committee and Shareholders Comments and Proposals Enel Américas S.A. received neither comments nor proposals with regards to the progress of company business between January 1 and December 31, 2017 from the Directors’ Committee or Shareholders who own or represent 10% or more of the shares issued with voting rights as stated in Articles 74 of Law No. 18,046 and 136 of the Regulation to Public Companies. Property and control 27 07Administration 28 Annual Report Enel Américas 201729 Letter from the ChairmanBoard of Directors 4 1 5 2 6 3 7 1. CHAIRMAN Francisco de Borja Acha Besga Degree in Law Universidad Complutense de Madrid DNI: 05263174-S From 04.28.2016 2. DIRECTOR José Antonio Vargas Lleras Degree in Law Universidad Colegio Mayor del Rosario, Colombia DNI: 79.312.642 From 04.28.2016 5. DIRECTOR Hernán Somerville Senn Lawyer Universidad de Chile Master of Comparative Jurisprudence University of New York DNI: 4,132,185-7 From 04.28.2016 3. DIRECTOR Enrico Viale Engineer Degree Universidad Politécnica de Turín MBA Escuela de Negocios Universidad de Santa Clara DNI: AU 2580379 From 04.28.2016 4. DIRECTOR Livio Gallo Electronic Engineer Universidad Politécnica de Milán DNI: AV 0246369 From 04.28.2016 6. DIRECTOR Domingo Cruzat Amunátegui Industrial civil engineer Universidad de Chile MBA The Wharton School de la Universidad of Pennsylvania Rut: 6,989,304-K From 04.28.2016 7. DIRECTOR Patricio Gómez Sabaini Business Administration Degree George Mason University, Virginia Master of Business Administration George Washington University, Washington DC Passport: 16941675N From 04.28.2016 30 Annual Report Enel Américas 2017Enel Américas is managed by a Board of Directors comprised of seven members, who remain in office for a three-year period and may be re-elected. The Board was appointed at the Ordinary Shareholders’ Meeting held on April 28, 2016. According to the Corporations Law, if a Director’s vacancy occurs, the whole board shall be renewed at the next ordinary shareholders’ meeting the corporation shall hold, and, in the meanwhile, the board may name a substitute. The Company doesn’t consider any substitute members. In the last two years, the following were also Board of Directors’ and Directors’ Committee Compensations Directors of Enel Americas: Francesco Starace Vice Chairman of the Board Nuclear Engineer Universidad Politécnica de Milán Passport: YA5358349 From 04.28.2015 to 04.28.2016 Francesca Di Carlo Director Degree in Economics Universidad La Sapienza, Roma Passport: AA2224406 From 04.28.2015 to 04.28.2016 Alberto De Paoli Director Degree in Economics Universidad La Sapienza, Roma Passport: YA4226864 From 04.28.2015 to 04.28.2016 Rafael Fernández Morandé Director Industrial Civil Engineer Pontificia Universidad Católica de Chile DNI: 6,429,250-1 From 04.28.2015 to 04.28.2016 Herman Chadwick Piñera Director Lawyer Pontificia Universidad Católica de Chile Rut: 4,975,992-4 From 04.28.2015 to 04.28.2016 Pursuant to Article 33 of Law No. 18,046 Corporations Law, the Ordinary Shareholders’ Meeting held on April 27, 2017 approved the compensations for the Board of Directors and Directors’ Committee for the 2017 accounting period. The compensations for the Directors’ Committee consist on an annual variable remuneration equal to one per thousand of the net profits of the period. As an advance payment, a monthly compensation was defined, part of which is at any event and part of it eventually, and it’s imputable to the aforementioned annual variable compensation. This compensation is consists on 180 UF of monthly fixed compensation at any event and 66 UF of attendance fees per meeting of the Board, up to a maximum of 15 sessions altogether. The compensation of the Chairman of the Board will be twice the compensation of a Director. The compensation for the Directors’ Committee consists on an annual variable remuneration equal to cero point one thousand seven hundred seventy five of the net profits of the period. It was determined to pay in advance one-month fee, one part in all events and a variable part, attributable to the referred variable annual remuneration. This compensation is consists on 60 UF of monthly fixed compensation at any event and 22 UF of attendance fees per meeting of the Board, up to a maximum of 15 sessions altogether. 31 AdministrationTotal compensation expenses in 2017 were US$ 526,856 and are shown in the following table. The Board of Directors did not incur in any expenses for external consulting services. 2017 Figures in US$ Name Position Fixed Remuneration Ordinary and Extraordinary Sessions Committee’s Fixed Compensation Committee’s Ordinary and Extraordinary Sessions Variable Compensation TOTAL 2017 Francisco de Borja Acha (1) Chairman José Antonio Vargas Lleras (1) Director Livio Gallo (1) Enrico Viale (1) Hernán Somerville Senn Director Director Director Domingo Cruzat Amunátegui Director Patricio Gómez Sabaini Director Total 93,417 93,417 93,417 39,968 37,106 39,968 280,250 117,042 31,139 31,139 31,139 93,417 12,367 11,413 12,367 36,147 - - - - 176,891 173,075 176,891 526,856 (1) Messrs. Francisco de Borja A., José Antonio Vargas Ll., Livio Gallo and Enrico Viale, renounced to any compensation payment. 2016 Total compensation expenses in 2016 were US$ 570,407 and are shown in the following table. The Board of Directors did not incur in any expenses for external consulting services. Figures in US$ Name Position Fixed Remuneration Francisco de Borja Acha (1) Chairman José Antonio Vargas Lleras (1) Vice Chairman Ordinary and Extraordinary Sessions Committee’s Fixed Compensation Committee’s Ordinary and Extraordinary Sessions Variable Compensation TOTAL 2016 Livio Gallo (1) Enrico Viale (1) Hernán Somerville Senn (2) Director Director Director Domingo Cruzat Amunátegui (2) Director Patricio Gómez Sabaini (2) Director Rafael Fernández Morandé (3) Director Herman Chadwick Piñera (3) Director 84,041 63,293 63,293 27,712 27,712 53,923 43,771 43,771 10,152 10,152 28,010 21,098 21,098 9,234 9,234 17,971 14,590 14,590 3,381 3,381 Total 266,051 161,769 88,673 53,914 - - - - - - 183,945 142,752 142,752 50,479 50,479 570,407 (1) Messrs. Francisco de Borja A., José Antonio Vargas Ll., Livio Gallo and Enrico Viale, renounced to any compensation payment. (2) Messrs. Hernán Somerville S., Domingo Cruzat A. and Patricio Gómez S., assumed their positions at the Board of Directors of Enel Américas in April 2016. (3) Messrs. Herman Chadwick Piñera and Rafael Fernández Morandé, held their positions at the Board of Directors until April, 2016. 32 Annual Report Enel Américas 2017 Social Responsibility and Sustainable Development Board Diversity Number of people by gender Female Male Total Number of people by nationality: Chilean Spanish Argentine Colombian Italian Total Board of Directors Consulting Expenses During 2017, the Board of Directors did not make any expenses in consulting services. Property over Enel Américas 0 4 2 1 7 6 1 7 Number of people by age range: Between 41 and 50 years old Between 51 and 60 years old Between 61 and 70 years old Over 70 years old Total Number of people by seniority: Less than 3 years More than 12 years Total 0 7 7 2 1 1 1 2 7 Directors’ Committee Pursuant to Article 50 bis of law No. 18,046 Corporations Law, Enel Américas S.A. has a Directors’ Committee comprised by three members, with faculties and duties enumerated in said article and those delegated by the Board as established in the Regulation of the Director’s Committee. On January 1, 2017 the Directors’ Committee of Enel Américas S.A. was comprised by Messrs. Hernán Somerville Senn, Domingo Cruzat Amunátegui and Patricio Gómez Sabaini, all independent members of the Board. The Chairman and Financial Expert was Mr. Hernán Somerville Senn and the Secretary of the Directors’ Committee was Mr. Domingo Valdés Prieto. At the ordinary session of the Board of Directors held on April 29, 2016 were appointed as members of the Directors’ Committee Messrs. Hernán Somerville Senn, Patricio Gómez Sabaini and Domingo Cruzat Amunátegui. Mr. Hernán Somerville Senn was appointed Financial Expert of the Directors’ Committee. On the other hand, at the ordinary session of the Directors’ Committee As of December 31, 2017, according to the held on April 29, 2016, Mr. Hernán Somerville Senn was appointed Shareholders’ Register, none of the current Chairman of the Directors’ Committee and Mr. Domingo Valdés Directors held ownership of the company Prieto, Legal Counsel of the Company, was appointed secretary of Directors’ Committee. the committee. 33 AdministrationDirectors’ Committee Management Annual Report The Directors’ Committee held thirteen meetings in 2017. Consolidated Financial Statements of the Company as of During the sessions held in 2017, the Director’s Committee Income Statement and Significant Events, and the opinion addressed subjects regarding their interests, giving due “without any observation” issued by external auditors on fulfillment of their obligations dictated by the Article 50 July 26, 2017, signed by Mr. Emir Rahil, partner of Ernst statue number 18,046 about Public Limited Companies. & Young. When addressing and presenting the issue, the June 30 2017, its Notes, Financial Statements Analysus, 1.- Consolidated Financial Statements At the ordinary session held on February 24, 2017, the following documents were unanimously declared to have been examined; the Consolidated Financial Statements as of December 31, 2017, its Notes, Financial Statements and Significant Events, as well as the External Auditor’s opinions. Likewise, the Chairman of the Director’s Committee requested the Administration, Finance and Control Manager to develop a very thorough explanation to the market regarding the causes of the decrease of financial results and particularly the situation of Argentina. Additionally, the Chairman of the Committee, Mr. Hernán Somerville Senn, reminded that he had requested in several previous sessions a simplified presentation of the cash flow to the Committee in several previous sessions, which has not been presented yet. At the ordinary session held on March 31, 2017 unanimously took note of the modifications of the International Financial Reporting Standards effective from January 1, 2018. At the extraordinary session held on May 5, 2017, the Directors’ Committee unanimously, declared to have examined the Consolidated Financial Statements of partners of Ernst & Young, also expressed in relation to the provisions for derivatives and lawsuits, that they have not identified special situations being a comprehensive part of the usual reviews carried out in an external audit. At the ordinary session held on April 27, 2017, the Directors’ Committee unanimously, declared to have reviewed the Form 20-F and the Consolidated Financial Statements of the Company contained therein, which is to be presented before the aforementioned SEC, with the goal of complying by their norms and requirements issued by said public authority related with the emission of securities in said country. At the ordinary session of October 31, 2017, the Directors’ Committee unanimously, declared examined the Consolidated Financial Statements of the Company as of September 30, 2017, it’s Notes, Income Statement, Significant Events and the letter concerning the operations between related parties. 2.- Services provided by External Auditors and former employees of Ernst & Young Review the Company as of March 31, 2017, it’s Notes, Income At the ordinary sessions held on February 24, March 31, Statement and Significant Events. April 27, May 30, June 28, July 26, August 31, September 28, October 31, November 29 and December 15, all during At the ordinary session held on July 26, 2017, the 2017, the services provided by external auditors were Directors’ Committee unanimously declared examined the analyzed, those that were not from external auditors, and 34 Annual Report Enel Américas 2017it was agreed to declare that they do not compromise the The Directors’ Committee declared that the operation suitable technique nor the independence of judgment of contributed to the social interest and its price, terms and the respective external auditing companies. The latter is in conditions are adjusted to those prevailing in the market conformity to what is written In Section 202 of the Law at the moment of its approval. For this purpose the report Sarbanes Oxley, in article 242, final subsection, of the Law issued by the independent BDO Finanzas Corporativas S.A. 18.045, of the Value Market and in the Directors Committee was kept on hand. Guidelines. - At the ordinary session held on August 31, 2017 the - At the sessions of August 31 and October 31, the Directors’ Directors’ declared to have examined the operation Committee unanimously declared that the hiring of former between related parties regarding the subscription of an employees of Ernst & Young doesn’t mean any violation intercompany contract for the provision of services to Enel to the Sarbanes Oxley Act neither to local regulation, so Américas from Enel Green Power North America, for the there’s no legal impediment to hire them. The same issue investor relations services in the United States of America and in the same way was declared at the ordinary session jurisdiction, in New York city, and declared that the operation of November 29, 2017, with regards to a former employee contributed to the social interest and was adjusted in price, of BDO RCS Auditores Limitada. terms and conditions to those currently prevailing in the 3.- Operations between Related Parties Review At the ordinary session held on May 30, 2017, the Directors’ Committee declared to have examined the operation between related parties consisting on the intercompany loan operation of Enel Américas to its subsidiary Enel Brasil for an amount of USD 154 million, and declared that such operation contributed to the social interest of Enel Américas S.A., and its price, terms and conditions are adjusted to those prevailing in the market at the moment of its approval. - At the ordinary session held on July 26, 2017, the Directors’ Committee declared to have examined the operation between related parties regarding the capital increase proposed by the subsidiary Enel Argentina S.A. and consisting on the contribution of the social participants of the Enel Américas property in Edesur S.A., Yacilec S.A., Enel Generación El Chocón S.A., Enel Generación Costanera S.A., Enel Trading Argentina S.R.L. and Central Dock Sud S.A., using for these purposes the valuation of these social participations carried out by an independent appraiser BDO Finanzas Corporativas S.A., which is adjusted to the one performed by the independent appraiser Grant Thornton in the framework of the aforementioned operation. market. For this purpose the certification issued by the Administration, Finance and Control Management was kept on hand. - At the ordinary session held on October 31, 2017, the Directors’ declared to have examined the operation between related parties regarding an intercompany loan from Enel Américas to the SPV (Special Purpose Vehicle) used by Enel Brasil for the acquisition of the concession of the hydroelectric power plant Volta Grande, of up to BRL$ 852 million, equivalent to approximately USD 280 million, to be carried out only if needed by the Company, in a scenario on which the negotiations with banks in obtaining a bilateral loan don’t proceed in time and form. The Directors’ Committee declared that this operation contributed to the social interest of Enel Américas S.A. and its price, terms and conditions are adjusted to those prevailing in the market at the moment of its approval. 4.- Supervision and Evaluation of External Auditors At the ordinary session held on February 24, 2017, it was unanimously agreed that the work performed by the external auditors of the Company, Ernst & Young, carried out during the fiscal year 2016 was considered reasonable. 35 Administration5.- External Auditors Report on money order and money brokerage At the ordinary session held on February 24, 2017, the Directors’ Committee unanimously agreed to record that they had received formal and express consent on the report of money brokerage and money orders prepared by the external auditors, Ernst & Young, dated February 24, 2017. 6.- Review of the Internal Control Letter Notice Nº422 of the SVS The Superintendence of Securities and Insurance issued on December 6, 2007 the Notice N° 422, complementing the Notice N° 980 of December 24, 1990. This Notice gives specific instructions regarding internal control procedures, so it provides an interim report and extends the period indicated in Notice N° 980 for internal auditors to submit the operations between related parties of the Company, to which Mr. Rahil responded affirmatively. Mr. Hernán Somerville Senn continued, and asked in relation to the acquisition of the Brazilian electricity distribution subsidiary CELG and particularly regarding the appeals interposed by the Supreme Court of the Federal State of Brazil, which was answered by the Chief Executive Officer Mr. Luca D’Agnese and by Mr. Emir Rahil. - At the ordinary session held on November 29, 2017, the Directors’ Committee agreed unanimously to have taken formal and express knowledge of the Letter of Internal Control related to Enel Américas S.A., prepared by Ernst & Young in order to comply with the regulations issued by the Superintendence of Securities and Insurance (SVS) on this matter. 7.- Review of the External Auditors of Matters Covered in the NCG Nº385 an internal control final report, indicating that the delivery At the ordinary session held on February 24, 2017, should be at the latest as of the date when the Board of unanimously it was agreed as reviewed by the External Directors takes notice of the financial statements for the Auditors the matters referred in paragraph 1 d) of the period ended December 31 of each year. General Standard Legislation Nº 385 of the SVS, and it was declared that none of the matters mentioned in sub- As such, at the ordinary session held on February 24, paragraphs ii, iii and v were referred to, of the previously 2017, the Directors’ Committee agreed to have taken mentioned item have occurred. formal and express knowledge of the Letter of Internal Control dated February 24, 2017, prepared by Ernst & Young in order to comply with the regulations issued by the Superintendence of Securities and Insurance (SVS) on this matter. The Director Mr. Domingo Cruzat Amunátegui consulted Mr. Emir Rahil if Ernst & Young would analyze the business with the objective of preventing regrettable cases such as La Polar case, to which Mr. Rahil responded affirmatively. The Chairman of the Directors Committee asked Mr. Emir Rahil whether Ernst & Young has reviewed lawsuits provisions and the situation of derivatives and 8.- External Auditors’ Fees for the Exercise 2016 At the ordinary session held on February 24, 2017, the Directors’ Committee unanimously agreed to approve the fees paid by the companies of the Group during the 2016 exercise, to the different external auditors that the Company uses. 36 Annual Report Enel Américas 20179.- External Audit Contract between Enel Américas S.A. and Ernst & Young for the exercise 2017 Riesgo Limitada and Fitch Chile Clasificadora de Riesgo Limitada will be proposed at the respective Shareholder’s Meeting as private risk national rating agencies, and Fitch Ratings, Moody’s Investors Service and Standard & Poor’s International Rating Services will be appointed as the private international risk rating agencies for the 2017 exercise. At the ordinary session held on May 30, 2017, the Directors’ Committee unanimously declared to have examined and approved the contract to be subscribed between Enel Américas S.A. and the external auditors Ernst & Young. 12.- External Audit Plan for 2017 10.- External Auditors’ Proposal At the extraordinary session held on May 30, 2017, the Directors’ Committee unanimously agreed to acknowledge the presentation made by Mr. Emir Rahil, partner of Ernst & Young, on the External Audit Plan for the year 2017. At the ordinary session held on March 31, 2017, the Directors’ Committee unanimously resolved to suggest the Board to propose at the Ordinary Shareholder Meeting that the following in priority order would be appointed for the examining of the current external auditing firm of Enel Américas S.A., for the year 2017: 1° E&Y; 2° PKF, 3° RSM and 4° BDO. The main reasons for proposing E&Y as the 13.- Analysis of Complaints to the Ethical Channel external auditor for Enel Américas S.A. are the following: At the ordinary session held on January 19 and at the (i) presented the most competitive proposal according ordinary session of August 31, both in 2017, the Directors’ to verified technical and economic evaluations of the Committee issued its opinion on each of the complaints proposals received; (ii) has a high qualification in the quality presented, delivering guidelines to follow up each one of of available resources and has extensive experience in the them and confirming what has been resolved by this entity, electricity sector; (iii) is one of the four most important in the sense that it will be responsibility of the Chairman of international and national audit firms; and (iv) it is the audit the Directors’ Committee to agree upon a special meeting firm with the highest level of synergy for Enel Américas in the event that the complaint deem it appropriate, in the S.A., as the parent and holding companies of Enel Américas opinion of the Chairman of the Committee itself. S.A. , Enel S.p.A. have E&Y as their lead auditor. 11.- Private Risk Rating Agencies’ Proposal At the ordinary session held on February 24, 2017, the Directors’ Committee unanimously agreed to propose to the Directors’ Committee that Feller Rate Clasificadora de - At the extraordinary session held on January 19, 2017, the Chairman of the Directors’ Committee suggested to evaluate of each case in relation to the merit of the convenience of prosecute against whoever does an illegal act, and also to perform surveys to verify whether employees have an adequate knowledge of the Ethical Channel a their perception of its operation. 37 Administration14.- Self Assessment on Internal Control At the ordinary session held on July 26, 2017, the Directors’ Committee unanimously agreed to declare the Self- Assessment structures and procedures on Internal Control as reviewed and to instruct the General Management to rectify the significant deficiency exposed by the Chief Financial Officer, within a reasonable period. 15.- Review of the Compensation System and Compensation Plans for Managers, Senior Executives and Employees of the Company 16.- Requests from public authorities from the United States At the ordinary session held on July 26, 2017, the Directors’ Committee unanimously agreed to recommend the Board to approve, in the terms requested by Ernst & Young, and subject to due compliance with external audit, with the requirements included in the Ordinary Rule N° 3,048 of April 13, 2004, and Nº12,826 of December 7, 2005, both enacted by the Superintendence of Insurance and Securities, subject to obtaining written consent of the subsidiary Empresa Distribuidora Sur S.A., so that Ernst & Young may comply with the requirement of the Public Company Accounting Oversight Board (PCAOB). Likewise, it was agreed to take notice of the answers provided to the Securities and Exchange Commission of the United States of America with regards to the observations to Form 20-F. At the ordinary session held on June 28, 2017, the Directors’ Committee unanimously declared to have examined the remuneration systems and compensation plans of the 17.- Meetings’ Schedule company’s managers, chief executives, and employees. At the ordinary session held on November 29, 2017, unanimously the Directors’ Committee approved the Ordinary Meetings’ Schedule for the year 2018. As such, and as given account in this report, the Directors’ Committee has fully comply with the obligations included in the Article 50 bis of Law N°18,046 of Corporations Law. Expenses of Enel Américas S.A. Directors’ Committee The Directors’ Committee did not make use of the expense budget for ordinary functions approved by the Ordinary Shareholders Meeting held on April 27, 2017. 38 Annual Report Enel Américas 2017Organizational Structure Board of Directors CHAIR M A N F. De Borja Ach a B e a g s R E FIC N A L AUDIT OF R affaele Cutrignelli R E T I N F R E FI C L O O R T F FIC E R H U M A N R E S O U R C E S A N C O M CHIEF EXECUTIVE O F F I C E R Luca D‘Agne s e M U L O NICATIONS OFFICER C H I E F F I N A N C I A José Miranda Montecinos Pa o l o P a l l o t t i ( 2 ) GENERAL COUNSEL PLA N N I N G A N D C O N Domingo Valdés Prieto Em a n u e l e B r a n d o li n i D ORGANIZATION OFFICER Alain Rosolino(1) (1) Left the position on 01.31.2018. (2) Paolo Pallotti took position on 02.01.2018 replacing Francisco Javier Galan Allue. 39 Administration Main executives 2 5 3 6 1 4 7 4. COMMUNICATIONS OFFICER José Miranda Montecinos Audiovisual Communicator Professional Institute DUOC UC Executive Competencies Diploma, Universidad de Chile Corporate Undertaking and Open Innovation Studies, Berkeley University Rut: 15,307,846-7 From 02.29.2016 5. CHIEF FINANCIAL OFFICER Paolo Pallotti Electronic Engineer Università degli Studi di Ancona Rut: 26,102,661-9 From 02.01.2018(1) 6. GENERAL COUNSEL Domingo Valdés Prieto Lawyer Universidad de Chile Master Degree in Law of University of Chicago Rut: 6,973,465-0 From 04.30.1999 7. PLANNING AND CONTROL OFFICER Emanuele Brandolini Industrial Engineer– Degree in Engineer with full marks (specialist in Management and Economy) Università degli Studi Tor Vergata, Rome (Italy) Masters Degree in Business Administration SDA BOCCONI, Milano (Italy) Rut 25,625,052-7 (1) Paolo Pallotti took position on 02.01.2018 replacing Francisco Javier Galán Allue. 1. CHIEF EXECUTIVE OFFICER Luca D’Agnese Physics Degree Scuola Normale Superiore de Pisa Master in Business Administration Escuela de Negocios de INSEAD Rut: 24,910,349-7 From 01.29.2015 2. HUMAN RESOURCES AND ORGANIZATION OFFICER Alain Rosolino Business Administration Degree Universidad LUISS Rut: 24,166,243-8 From 04.28.2016 to 01.31.2018 3. INTERNAL AUDIT OFFICER Raffaele Cutrignelli International Businesses Degree Nottingham Trent University (United Kingdom). Audit and Internal Control Masters Degree Universitá di Pisa (Italy) Certificate in Strategy, Innovation, Management and Leadership Massachusetts Institute of Technology (MIT) Rut: 25,553,336-3 From 10.01.2016 40 Annual Report Enel Américas 2017Officers and senior executives’ compensations During 2017, remunerations and benefits received by the Chief Executive Officer and senior executives of the Company amounted to US$4,046 million in fixed remunerations and US$119 million in benefits. During 2016, remunerations and benefits received by the Chief Executive Officer and senior executives of the Company amounted to US$4,917 million in fixed remunerations and US$331 million in variable remunerations and benefits. This amount included compensations for senior managers and executives in exercise as of December 31, each year, as well as those that left the company during the respective period. Benefits for officers and senior executives The Company provides the benefits of supplementary health insurance and a catastrophic insurance for its main executives and their family group that is credited as a dependent charge. In addition, the Company has life insurance for its main executive. These benefits will be granted in conformance to the management level that corresponds to the employee in due time. In 2017, the amount was CLP$3,706,007 million, which is included in the remunerations received by the senior management. Incentive plans for officers and senior executives Enel Américas has an annual bonus plan for complying with objectives and the level of individual contribution to the company results for its executives. This plan includes a definition of the ranges of bonus according to the hierarchical level of the executives. Bonuses are given to the executives is determined by a number of gross monthly wages. 41 AdministrationSeverance paid to officers and senior executives There were no compensations for years of services paid to managers and senior executives during 2017. Property over Enel Américas As of December 31, 2017, the register of shareholders reflected that no main executives had ownership on the Company. There are no requests for the Chief Executive Officer and senior executives to hold securities issued by the Company; however there is an obligation to inform securities’ holdings and their transactions, both in the Securities Market Law and the Company’s Information Management Manual of Market Interest. 42 Annual Report Enel Américas 2017 Administration of main subsidiaries ARGENTINA Costanera Antonino Ascione Degree in mechanical engineering (cum laude) Universidad Federico II of Napoli BRAZIL Enel Brasil Carlo Zorzoli Electrical Engineer Università di Roma, La Sapienza COLOMBIA Emgesa Bruno Riga Aeroespace Engineer Universidad de Pisa Hidroeléctrica El Chocón Daniel Garrido Industrial Engineer Universidad Tecnológica Nacional Edesur Juan Carlos Blanco Electrician Engineer Universidad Tecnológica Nacional Central Dock Sud Gustavo Diego Manifesto Electromecanical Engineer Universidad de Buenos Aires Enel Green Power Cachoeira Dourada Luigi Parisi Chemical Engineer Università di Pisar Codensa David Felipe Acosta Correa Electrical Engineer Universidad Pontificia Bolivariana PERU Enel Generación Perú Marco Raco Aeronautical Engineer Universitá di Pisa - Italy Enel Distribución Perú Riccardo Lama Electrician Engineer La Sapienza University of Rome Enel Generación Fortaleza Leonardo Walter Soares Electrical Engineer / Production Pontifícia Universidad Catolica Rio de Janeiro Enel Cien Abel Alves Rochinha Mechanic Engineer Pontifícia Universidad Católica Río de Janeiro Enel Distribución Rio Ramon Castaneda Industrial Civil Engineer Pontifícia Universidad Católica Chile Enel Distribución Ceará Roberto Zanchi Electrotechnical Engineer Universidad de Padova Enel Distribución Goiás (Former Celg) Abel Alves Rochinha Mechanic Engineer Pontifícia Universidad Católica Río de Janeiro Enel Soluções Rafael Felipe Coelho Business Admistration Degree Pontificia Universidad Catolica Rio de Janeiro 43 Administration08Human Resources 44 Annual Report Enel Américas 201745 Letter from the Chairman46 Annual Report Enel Américas 2017Human Resources Distribution The employees’ distribution of Enel Américas as of December 31, 2017, including information related to the subsidiaries in the four countries where Enel Group operates in Latin America and the joint control entities, was the following Company Enel Américas Enel Brasil Cachoeira Dourada Fortaleza Cien Enel Distribución Rio (1) Enel Distribución Ceará Enel Distribución Goiás Costanera El Chocón Edesur Enel Trading Argentina Dock Sud CTM y TESA Enel Generación Perú (2) Enel Distribución Perú Emgesa Codensa Total Managers and Senior Executives Professionals and Technicians Employees and Others 7 5 - 2 - 2 3 7 4 1 30 6 3 1 21 24 13 24 154 45 66 67 43 26 904 912 738 392 45 3 1 18 16 9 169 248 353 43 6 3,179 1,042 17 72 4 299 564 591 1,350 9,313 4 12 - - - - 2 1,926 (1) Includes Enel Soluções. (2) Includes Enel Generación Piura and Generalima. Total 55 72 85 61 35 1,075 1,163 1,098 439 52 4,251 27 87 5 320 588 604 1,376 11,393 47 Human ResourcesSocial Responsibility and sustainable development Diversity in the General Management and the other management departments reporting to the latter or to the Board of Directors Number of people by gender: Female Male Total Number of people by nationality: Chilean Spanish Italian Total Number of people by range age: Less than 30 years old Between 30 and 40 years old Between 41 and 50 years old Between 51 and 60 years old Between 61 and 70 years old Total Number of people by seniority: Less than 3 years Between 3 and 6 years More than 6 and less than 9 years Between 9 and 12 years More than 12 years Total 48 0 7 7 2 1 4 7 - 3 1 3 - 7 3 3 - - 1 7 Diversity in the organization Number of people by gender: Female Male Total Number of people by nationality: Argentina Brazilian Chilean Colombian Italian Total Number of people by range age: Less than 30 years old Between 30 and 40 years old Between 41 and 50 years old Between 51 and 60 years old Between 61 and 70 years old Total Number of people by seniority: Less than 3 years Between 3 and 6 years More than 6 and less than 9 years Between 9 and 12 years More than 12 years General Total 14 34 48 1 3 41 2 1 48 4 22 13 8 1 48 8 9 11 2 18 48 Average Fixed Salary of women with respect to men according to their professional level Contents: Senior Management Middle Management - Level 1 Middle Management - Level 2 Middle Management - Level 3 Professionals - Level 1 Professionals - Level 2 Administratives 0% 115% 0% 75% 84% 113% N/A Annual Report Enel Américas 2017Human Resources Activities Labor Relations Labor Security and Health During 2017 the Company continued the regular meetings At Enel Américas occupational safety and health are program with unions, enabling an open dialogue with the objectives closely linked to the business, whose nature employees’ representatives, therefore improving work is subject to critical risks. In the continuous improvement conditions and environment at the workplace. process, where everybody makes contributions, leadership is a value that especially highlights with regards to the real integration of occupational health and safety at every level and in each activity developed by the company, which strengthens its priority in corporate management due to its strategic importance. Health Dissemination and Promotion The objective of this program is to provide health, educate and train employees through activities related to the promotion of health in quality of life, who includes a widespread dissemination through posters, graphic material and information sent through mail, denominated “advices that give life”. Among the topics that feature every month, we highlight the following: > March: anti-stress campaign: Disclose practical recommendations to remove its causes. > April: Immunization campaign, an invitation to vaccination to prevent influenza. > May: Anti tobacco campaign, including advises to prevent its consumption. > June: Prostate and cervical cancer, an invitation to an annual preventive examination. > July: Viral contagion and respiratory diseases prevention: Recommendations to prevent infections. > August: Heart care campaign: Practical recommendations for its care. > September: Colon and gastric cancer campaign for the prompt detection of these diseases through preventive examination. > October: Breast cancer prevention: Invitation to participate in the prevention of this disease through its early detection. > November: Power your energy campaign with practical nutrition advices to improve the quality of life. > December: Skin care campaign throughout the year. Advises for skin care from ultraviolet radiation and other agents. Additionally, the Company carried out several health programs, such as: • Immunization Program • Preventive Health Exams Program • Cardiovascular Risk Program • Break Gym Program 49 Human ResourcesAdditionally, continuity has been given to the interaction with Human Resources, known as Interactúa. These are meetings with the permanent presence of human resources whose objective is to achieve greater proximity, knowledge from employees of the company’s policies and good practices, and to be aware of the needs required for the development of their daily job. In 2017 the program called “Areas are introduced” was implemented, where employees deepen in the roles, functions and challenges of the different areas of the company. The importance of this program is the promotion of a culture of cooperation particularly between the different areas of the company, transforming, guiding and projecting the teams towards a culture focused on “how may I help you?.” We count with professional development management through promotion actions by merit through local and broad work opportunities where the Group has presence for the programs oriented to meritocracy and development. Other interesting initiatives are the One-on-One meetings, consisting on personalized conversations with each employee that enables the deepening of their motivations and future aspirations, strengthening closeness and relationships with internal clients. At Enel Américas, the chances for feedback of managers with employees are opportunities to generate greater closeness, transparency, alignment of expectations and the support of professional development. The promotion of a culture of continuous feedback guides us to the development of employees’ talents and the conformation of high performance teams. In 2017 the “Recognize” Program continued in a renovated version, which seeks to foster a culture of recognition within the company and to generate formal meetings where employees recognize their colleagues. The “Recognize People” Program, where the company identifies those initiatives that have meant great value for the entity through the “Recognize Contributions” Program. So also massive ceremonies were performed in the Company to recognize outstanding employees, work trajectory, among others. People Management Work environment management Work environment is a priority for Enel América, for this reason an Environment and Safety Study is carried out semi-annually, which counts with broad participation and from which the Company prepares an action plan to enrich and strengthen the work environment of the Company. Work environment management and commitment are the fundamental cornerstones of the company’s strategy, due to its close relationship with the people that constitutes the human resources of the company During 2017, a series of initiatives continued. These activities sought to maintain the employees’ motivation, satisfaction and commitment, in the lines of leadership, communication, meritocracy and development, reconciliation measures and good labor practices. Regarding leadership, Enel Américas has a program developed to promote and strengthen the role of leaders in the generation of a corporate environment that enables satisfaction and development of its employees. The program “Creating Footprints” has been designed to leverage the exercise of leadership and the role of the Manager in our “Open Power” culture, being an active and strategic role focusing on the mobilization of their equipment and the ability to promote learning. This is a comprehensive program for skills training, education and accompaniment that comprises the development of individual itinerary for each manager. The activities included in this program are: skills training workshop, individual coaching, guided accompaniment for meetings and the creation of a network of good practices and people management. With the purpose of establishing a permanent and close contact with employees, Enel Américas has implemented a set of communication initiatives under the brand RHO Contigo, which daily informs and explains various topics of interest focused on people management. To that end, a weekly radio show is developed, a website, good practice manuals for managers and employees, among other actions. 50 Annual Report Enel Américas 2017Regarding reconciliation measures and good labor and balance the parents’ needs and professional growth. practices, smart physical spaces were implemented with The actions of the program cover health and wellbeing of the purpose of strengthen team activities, promoting women areas, talks related to the meaning of the changes relationships for sharing knowledge and integration. These that arrives with a new child for the family and to generate workspaces foster the use of technology and the efficient trusting bonds between pregnant employees and the use of time in a more Informal and creative environment. company. The new challenges of Enel Américas demand to lead a In the Age dimension, the development of tutoring culture of constant change within the organization. In this programs to support employees during certain important regard, in 2017 the company developed the program agent transition periods (for example, the recruitment of new of change comprised of approximately 50 employees. staff, employees next to retirement, Millennium Generation This team has developed initiatives for cultural change and Zeta Generation). that help businesses to enforce their projects. Each team had a Manager of the Company as Sponsor that supports In the Nationality dimension, a tutor is assigned to expatriate and guides their initiatives, and make a link between the workers for assistance and support during the expatriation technical project and the initiatives of cultural change that period in order to acknowledge, respect and manage the the implementation demands. contrasts between people from different nationalities and Diversity Under the Diversity dimension and Inclusion Policy, Enel Américas has developed as part of its strategy a series of practices related to gender, age, nationality and disability. This policy promotes the principles of no discrimination, equality of opportunities, inclusion and balance between personal and work lives, and also fundamental values in the activities of the companies of the Group. The Policy has established three general principles: 1. Reject any form of arbitrary discrimination, ensure and promote diversity, inclusion and equal opportunities. 2. Promote and maintain a climate of respect for the dignity, honor and identity of the individual. 3. Ensure the highest confidentiality standards in relation to any information related to the private lives of employees that they would have access to. In the Gender dimension, the Company evaluated the population and looks for a balance in the initial stage of the recruitment and selection processes, and to generate relationships with universities and professional institutes to promote the participation and inclusion of women students, specially in technical areas. promote their integration In the Disability dimension, this year a shared value agreement was signed with Teletón Foundation through which the participation of young people with disabilities in the workforce will be promoted. Additionally, together with Teletón Foundation, the Company developed an e-learning course of awareness and adaptation to labor inclusion. Reconciliation measures and labor flexibility One of the reconciliation and labor flexibility measures carried out during 2017 is the definition of a new teleworking program method, meaning an evolution of Teleworking Program that started in 2012. “Smart working” consolidated one of the most valued reconciliation measures in the Company, providing more flexibility in the job execution for the employee. Currently in Enel in Chile, we have 256 employees subscribed in the program, 11 of them from Enel Américas, who one day per week chosen by them (between Tuesday and Thursday), work from their homes or wherever they choose, and must comply with the safety and health measures established by current regulations. This initiative contributes to the harmony in the workplace and with their families, together with their quality of life. Additionally, the purpose of the implementation of the Parental Program is to increase the value of maternity Additionally, during 2017, and among those measures, the Company carried out the following initiatives oriented to strengthen the quality of live of their employees: 51 Human ResourcesExtension Program of Sports and Culture: its a traditional program of sports activities performed in the facilities of the company and through external partnerships, with workshops and the practice of different sports, such as football, baby football, basketball, volleyball and others, and also schools Recruitment and Selection of sports for the employees’ children such as tennis, football The main objective for Enel Américas is to incorporate and skating. Also, the company offers art workshops, the best people for vacant positions, our guiding principle exhibitions, tours, family trips and other extension initiatives being to favor internal candidates in the first instance. addresses to the employee and their families. There are several actions addressed to the employees’ children, both recreational and educational, among which summer and winter camps stand out, consisting in recreational days for the employees’ children between 6 and 15 years old, which take place during the first month of the year and during the winter vacation period. The Company also offers training workshops during the summer addressed to the employees’ families. Other initiative is the Summer School of Universidad de las Américas, an initiative that seeks to improve the academic level of the employees’ children at senior school. And as a way to encourage the children’s’ study, year after year the Academic Excellence Award is given to the employees’ children that have a high performance in their studies, for students at elementary school and at the university. During the year, the company also performs also various events to foster the reconciliation of work and family, being the Christmas Party one of the most important ones, consisting on a family celebration for employees’ children born after 2004; “Come to my birthday”, is a celebration performed each month at the company’s stadium for children under 12 years old. The following important events also stand out: the End-of- Year Party, a corporate event for all employees, consisting on a dinner and entertainment party, contests and dance; and the “Work Trajectory Award”, which is a corporate celebration that each year acknowledges employees with over twenty years of service at the company. Covering vacancies The main objective of Enel Américas is to incorporate the best people that must have the culture of change and digital thinking. During 2017, a woman filled one vacant position internally. Internships and Young Talent Attraction Program In this line, an important project in terms of the generation of new recruitment sources is the incorporation of young future professionals from the best universities of the country as practitioners and thesis students. These students get the opportunity to consolidate theoretical learning in the context of Enel Américas’ business, thus achieving professional training with knowledge of reality and the challenges of the group, being an important source of recruitment for our organizational culture. This internship program is carried out on a permanent basis during the year, being the summer is the most active period. In 2017 a total of 5 students were practitioners of thesis in Enel Américas. In order to generate ties with universities and attract the best students, during 2017 Enel participated in the Job Fair of the Department of Physical Sciences and Mathematics of Universidad de Chile, and also in the Job Fair of the Faculty of Engineering of Universidad Católica de Chile. Our stand received of the career students of the Industrial Civil Engineer, Electric Civil Engineer and Hydraulic Civil Engineer. 52 Annual Report Enel Américas 2017Diversity and inclusion For Enel Américas, to have different work teams and to foster an inclusive work environment is essential for promoting an innovation culture. Diversity gives the possibility to visualize different points of view and opinions that enrich the work environment and adds value to the business. In our business we value the differences and turn them into competitive advantages, so we are allowed to improve our processes, products and services, through incentives to creativity, learning, flexibility and respect. These also strengthen our brand and make us more attractive to the talents available in the market. Finally, and in the field of continuous improvement, this year the On Boarding process was carried out to accompany and follow up the new employees through presentations to know the company, and the designation of a Tutor to guide them to become part of the company. Educational Action Training Enel América’s training program for 2017 was built and executed on the basis of two main management principles: the first principle is to achieve the right balance between educational activities focused on skills development and essential technical knowledge for the best performance of our employees in their positions. The second principle is the training program financing, regarding the needs detection mechanism that enables the identification, together with the collaborator and the manager, of technical and behavioral gaps that needs to be covered, with regards to the individual productivity in the workplace in order to access to possible future development opportunities. The needs detection system is denominated IDP (Professional Development Itinerary), whose implementation takes two years. Technical training is the main focus of attention of training, because of the need to update technical knowledge and acquire new management tools. Among technical training activities, those related to knowledge management stand out, which consist on the implementation of activities to transfer knowledge and experiences in which employees that have greater expertise in specific topics teach others that are developing those skills, which reaffirms our commitment with development, recognition and knowledge dissemination inside the company. In relation to the development of new behavioral skills, different programs were implemented during 2017. Among them, the internal certificate of Project Management and Evaluation stands out, which Universidad de Chile offers under a design specially made for our company’s needs. In this same context, the activities related to the development of leadership skills are also relevant, being particularly important the managements’ program, which seeks to identify the leadership gaps of each manager and to develop a training plan specifically designed for individual needs. Finally, and as declared in every level and segment of employees inside the company, risks prevention, health and in general safety of people is a particularly relevant focus and permanent attention. 53 Human Resources09Exchange Transactions 54 Annual Report Enel Américas 201755 Letter from the ChairmanExchange Transactions Below you will find a detail of the quarterly transactions in the last three years made in the stock exchanges where the Enel Américas’ shares are traded: in Chile through the Santiago Stock Exchange, the Electronic Stock Exchange of Chile and the Valparaíso Stock Exchange, and in the United States through the New York Stock Exchange (NYSE). Santiago Stock Exchange During 2017, 9,393 million shares were traded at the Santiago Stock Exchange, equivalent to CLP$ 1,211,204 million. The closing price of the stock in December was CLP$ 137.03. Period 1st quarter 2015 2nd quarter 2015 3rd quarter 2015 4th quarter 2015 2015 Total 1st quarter 2016 2nd quarter 2016 3rd quarter 2016 4th quarter 2016 2016 Total 1st quarter 2017 2nd quarter 2017 3rd quarter 2017 4th quarter 2017 2017 Total Units Amounts (Chilean Pesos) Average 1,389,153,497 1,579,468,813 1,314,355,177 1,436,751,752 5,719,729,239 1,540,145,250 1,753,142,660 1,232,162,338 2,168,846,180 6,694,296,428 2,229,781,463 2,009,919,858 2,356,887,602 2,796,096,892 9,392,685,815 275,998,191,628 334,826,261,051 250,659,886,643 253,340,302,162 1,114,824,641,484 266,620,137,076 212,677,167,355 140,048,801,925 239,278,798,879 858,624,905,235 273,721,586,257 261,422,184,124 309,180,255,882 366,879,556,230 1,211,203,582,493 198.83 211.43 191.24 176.50 194.5 172.74 110.85 113.49 110.60 126.92 122.90 130.71 131.24 131.46 129.08 Electronic Stock Exchange of Chile At the Electronic Stock Exchange of Chile a total of 971 million shares were traded during 2017, equivalent to CLP$126,724 million. The closing price of the share in December was CLP$133.74. Period 1st quarter 2015 2st quarter 2015 3rd quarter 2015 4th quarter 2015 2015 Total 1st quarter 2016 2nd quarter 2016 3rd quarter 2016 4th quarter 2016 2016 Total 1st quarter 2017 2nd quarter 2017 3rd quarter 2017 4th quarter 2017 2017 Total 56 Units Amounts (Chilean Pesos) Average Price 75,325,511 153,979,478 172,604,478 167,393,236 569,302,703 130,742,124 122,026,677 88,217,958 228,583,097 569,569,856 78,056,955 253,547,191 367,188,645 272,011,584 970,804,375 14,893,594,307 33,094,253,771 32,789,265,995 29,438,618,540 110,215,732,613 22,440,123,693 14,581,565,262 10,001,108,374 25,262,018,950 72,284,816,279 9,660,465,656 32,973,128,058 48,153,275,546 35,937,385,836 126,724,255,096 197.37 213.08 193.19 176.32 194.99 172.97 121.46 113.65 111.66 129.94 121.16 130.37 130.87 132.97 128.84 Annual Report Enel Américas 2017Valparaíso Stock Exchange A total of 162.9 thousand shares were traded during the year at the Valparaíso Stock Exchange, equivalent to CLP$ 20.4 million. The closing price of the share in December was CLP$ 124,00. Period 1st quarter 2015 2nd quarter 2015 3rd quarter 2015 4th quarter 2015 2015 Total 1st quarter 2016 2nd quarter 2016 3rd quarter 2016 4th quarter 2016 2016 Total 1rd quarter 2017 2nd quarter 2017 3rd quarter 2017 4th quarter 2017 2017 Total Units 13,500 0 0 0 13,500 0 0 120,460 0 120,460 5,576 29,273 2,070 126,000 162,919 Amounts (Chilean Pesos) 2,660,000 Average Price 197.5 0 0 0 2,660,000 0 0 13,512,912 0 13,512,912 697,388 3,816,345 270,232 15,624,000 20,407,965 197.5 112.46 112.46 125.06 128.68 130.54 124.00 127.07 New York Stock Exchange (NYSE) The stocks of Enel Américas began to trade in the New York Stock Exchange (NYSE) on October 20, 1993. At that time, the name of the company was Enersis and the ticker symbol was ENI. One ADS (American Depositary Share) of Enel Américas represents 50 shares and its current ticker symbol is ENIA. Citibank N.A. acts as a depositary bank and Banco Santander Chile as custodian in Chile. During 2017, 237 million ADS were traded in the United States, equivalent to US$ 2,354 million. The ADS closing price in December was US$ 11.17. Period 1st quarter 2015 2nd quarter 2015 3rd quarter 2015 4th quarter 2015 2015 Total 1st quarter 2016 2nd quarter 2016 3rd quarter 2016 4th quarter 2016 2016 Total 1st quarter 2017 2nd quarter 2017 3rd quarter 2017 4th quarter 2017 2017 Total Units 31,386,671 52,955,231 46,264,472 60,162,543 190,768,917 58,523,621 59,311,337 45,809,391 52,176,921 215,821,270 55,867,021 66,972,268 59,641,261 54,800,714 237,281,264 Amounts (Dollars) Average Price 499,346,581 915,144,721 646,446,669 755,874,266 2,816,812,237 719,235,235 562,497,059 395,562,633 432,967,188 2,110,262,115 532,101,627 653,636,388 603,478,379 564,766,815 2,353,983,209 15.91 17.19 14.09 12.58 14.94 12.35 9.68 8.59 8.32 9.73 9.45 9.81 10.14 10.34 9.93 57 Exchange TransactionsMarket Information In 2017 the Chilean stock market showed the greatest growth of the last seven years in terms of profitability. The IPSA index yield increased 34.0% compared to 2016, representing the highest growth since 2010. This yield was even higher than the ones experienced by the main global markets, such as New York (Dow Jones, +25.1%) and London (FTSE 100, +7.6%), whilst in Latin America the main bourses shower very positive returns, such as Argentina (+77.7%), Brazil (+26.8%), Colombia (+11.9%) and Peru (26.6%). On the other hand, during 2017 the currencies in the countries where Enel Américas operates appreciated in relation to the dollar of the United States with the exception of Argentina, meanwhile GDP grew in the four countries (Argentina, +2.8%; Brazil, +1.1%; Colombia, +1.8%, and Peru, +2.5%). Santiago Stock Exchange In the local market, the performance of Enel Américas’ stock (traded as Enersis from January 1 to April 20, 2016) during the last two years compared to the Selective Stock Prices Index (Índice Selectivo de Precios de Acciones, IPSA) is the following: Variation Enel Américas IPSA 01/01/2016 - 04/20/2016(1) 04/21/2016 - 12/31/2016(2) 8.9% 8.3% 15.3% 4.1% 2017 25.9% 34.0% (1) Price variation of Enersis’ stock, since January 1 to April 20, 2016. (2) Price variation of Enel Américas’ stock, since April 21, 2016 to December 31, 2016. New York Stock Exchange (NYSE) The performance of Enel Américas’ ADRs listed in the NYSE (ENIA) compared to Dow Jones Industrial Index and the Dow Jones Utilities Index during the last two years is shown below: Variation ENIA Dow Jones Industrial Dow Jones Utilities 01/01/2016 - 04/26/2016(1) 04/26/2016 - 12/31/2016 (2) 14,2% 3,2% 11,3% 11,3% 9,5% 1,0% 2017 36,1% 25,1% 9,7% (1) Price variation of Enersis’ ADR (ticker symbol was ENI), from January 1 to April 26, 2016 (before the ADR split between ENIA and ENIC). (2) Price variation of Enel Américas’ ADR (ticker symbol is ENIA), from April 27 to December 31, 2016 (after the ADR split). 58 Annual Report Enel Américas 201759 Exchange Transactions10Dividends 60 Annual Report Enel Américas 201761 Letter from the ChairmanIn accordance with General Norm N°283, Number 5, the dividends policy of the company corresponding to the exercises 2018 and 2017 are transcribed below. 2018 Dividend Policy Procedure for Dividends Payment General Aspects The Board of Directors of the Company, in session held on February 28, 2018, approved the following Dividend Policy and the corresponding procedure for the dividends payment of Enel Américas S.A. for the period 2018. Dividend Policy The Board of Directors’ intention is to distribute an interim dividend against 2018 profits, of up to 15% of profits accounted as of September 30, 2018, as shown in the financial statements of Enel Américas S.A. at that date, and payment will be carry out in January 2019. For the dividends payment, whether provisory or final, and in order to avoid their improper collection, Enel Américas S.A. considers the following modalities indicated: 1. Deposit in banking checking account, whose account holder is the shareholder, 2. Deposit in banking savings account, whose account holder is the shareholder; 3. Send a nominative check or bank check by certified mail to the shareholder’s residence recorded in the Enel Américas S.A.’s shareholders’ register; and 4. Withdrawal of the check or bank check at the offices of DCV Registros S.A., in its capacity as Enel Américas S.A’s administrator of the shareholders’ register, or in the bank or branch offices are determined for such purpose and that will be informed in the notice published regarding the dividends’ payment. For these purposes, checking or savings banking accounts can be located anywhere in the country. The Board of Directors will propose to the Ordinary Shareholders’ Meeting, to be held during the first four months of 2019, to distribute a final dividend, an amount equivalent to 40% of the profits of the 2018 accounting period. It’s worth to highlight that payment modality chosen by each shareholder will be used by DCV Registers S.A. for all dividends payments, while the shareholder doesn’t express in writing his intention to modify it and thus records a new option. The definite dividend will correspond to be defined by the Regular Shareholders’ Meeting, to be held during the first four months of 2019. Shareholders that don’t have a payment modality registered will be paid according to modality No. 4 mentioned above. Compliance of the aforementioned program will be conditioned, in matter pertaining to dividends, to the profits effectively obtained, as well as on the results that forecasts that periodically the Company performs or the existence of certain circumstances, as appropriate. In those cases which checks or bank checks are returned by mail to DCV Registers S.A., they will remain under custody until the shareholders withdraw or request them. In the case of deposits in banking checking accounts, Enersis S.A. and/or DCV Registers S.A. may request, for 62 Annual Report Enel Américas 2017security reasons, verification by the corresponding banks. Regular Shareholders’ Meeting, to take place during the If the accounts indicated by the shareholders are objected, first four months of 2018. whether in a prior verification process or for any other cause, the dividend will be paid according to the modality Compliance of the aforementioned program will be indicated in Item No. 4 mentioned above. conditioned, in matter pertaining to dividends, to the profits effectively obtained, as well as on the results that forecasts On the other hand, the Company has adopted and will that periodically the Company performs or the existence of continue to adopt in the future all necessary security certain circumstances, as appropriate. measures required that is required by the dividends payment process, in order to safeguard both the shareholders as well as Enel Américas S.A. 2017 Dividend Policy General Aspects Distributable Income of 2017 The distributable income of 2017 is shown below: Net Income * Distributable Income * Attributable to the controlling shareholder Thousands US$ 709,043 709,043 At the session held on February 24, 2017, the Board of Directors of the Company approved the following Dividends Policy and the procedures for payment of Enel Distributed Dividends Américas S.A. dividends for the 2017 accounting period, The following chart shows the dividends per share paid in which was presented at the Ordinary Shareholders the last years: Meeting of April 27, 2017. N° Dividend 84 85 86 87 88 89 90 91 92 93 94 95 96 (1) Type of dividend Interim Final Interim Final Interim Final Interim Final Interim Final Interim Final Interim Closing Date Payment Date 01-21-2012 01-27-2012 05-17-2012 05-24-2012 01-19-2013 01-25-2013 05-04-2013 05-10-2013 01-25-2014 01-31-2014 05-10-2014 05-16-2014 01-24-2015 01-30-2015 05-18-2015 05-25-2015 01-23-2016 01-29-2016 05-17-2016 05-24-2016 01-21-2017 01-27-2017 05-20-2017 05-26-2017 01-20-2018 01-26-2018 Pesos/ Dollars per share (1) Exercise 1.46560 4.28410 1.21538 3.03489 1.42964 5.27719 0.83148 5.38285 1.23875 3.40599 0.94664 2.38705 0.00100 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 (1) The Extraordinary Shareholders’ Meeting held on April 27, 2017 approved the change of functional currency of the Company from Chilean Pesos to US Dollars. Then, from the period 2017 onwards, dividends are presented in dollars per share. Dividends Policy The Board of Directors’ intention is to distribute an interim dividend against 2017 profits of up to 15% of profits accounted as of September 30, 2017, as shown in the financial statements of Enel Américas S.A. at that date, and the payment will be performed in January 2018. The Board of Directors will propose to the Ordinary Shareholders’ Meeting, to be held during the first quarter of 2017, to distribute a final dividend, an amount equivalent to 50% of the profits of the 2017 accounting period. The definite dividend will correspond to be defined by the Dividendos 63 11Investment and financing policy for 2017 64 Annual Report Enel Américas 201765 Letter from the ChairmanThe Ordinary Shareholders’ Meeting held on April 27, 2017 approved the Investment and Financing Policy detailed below. Investments Areas of Investment Enel Américas S.A. will perform investments, according to its bylaws, in the following areas: Contributions to carry out investments or create subsidiaries and associate companies whose activity is aligned, related or linked by any form or type of energy, the supply of public utilities, or whose main input is energy. Investments related to the acquisition, exploitation, construction, leases, administration, trading and disposal i) Investments in their subsidiaries of the electricity industry, those required for the fulfillment of the respective corporate purposes, whose maximum amount is equivalent to 50% of the Net Equity accounted in the Consolidated Balance Sheet of Enel Américas as of December 31, 2016; ii) Investments in other subsidiaries not related to the electricity business, as long as at least 50.1% of the total consolidated assets of Enel Américas are from the electricity sector. Participation in the Control of Investment Areas of any class of fixed assets, whether directly or through In order to control the investment areas and pursuant subsidiaries. to Enel Américas S.A. corporate purpose, the following procedure will be pursued whenever possible: Other investments of all kinds such as financial assets, titles or securities. > i) It will be proposed at the ordinary shareholders’ Maximum Investment Limits The maximum investment limits for each investment area are the following: meetings of our subsidiaries and associate companies the appointment of directors related to the Enel Américas S.A.’s stake in that company, candidates that preferably need to be directors or executives of the Company or its subsidiaries; > ii) The investment, financial and commercial policies will be proposed to the subsidiaries and associate companies, as well as the accounting criteria and systems to be followed; > iii) The management of the subsidiaries and related companies will be supervised; > iv) There will be a permanent control of debt limits. 66 Annual Report Enel Américas 2017 Financing Maximum Debt Level The maximum debt level of Enel Américas is determined that the relation Total Financial Debt (calculated as Other Current Financial Assets plus Other Non-Current Financial Management Attributions to Agree with Lenders on Granting of Guarantees Liabilities) has to be less or equal to 2.2 times Total Equity, One of the duties of the Extraordinary Shareholders’ based on the Consolidated Balance Sheet of Enel Américas Meeting is to approve the granting of tangible or personal as of December 31, 2016. guarantees to cover third parties’ obligations, in relation to the essential assets detailed further on. Management Attributions to Agree with Lenders Restrictions related to Dividends’ Distribution Essential Assets for the Normal Operation of the Company Dividends restrictions may only be agreed with creditors if those restrictions were previously approved at the shareholders’ meeting (ordinary or extraordinary). The essential assets for the operation of Enel Américas are the direct or indirect participation, which enables the control through the ownership of the majority of shares or the existence of shareholders’ agreements or pacts, of Enel Brasil and Emgesa. Investment and financing policy for 2017 67 12Business of the Company 68 Annual Report Enel Américas 201769 Letter from the ChairmanBusiness Structure GENERATION DISTRIBUTION ENEL GENERACIÓN COSTANERA EDESUR ENEL GENERACIÓN EL CHOCÓN ENEL DISTRIBUCIÓN RÍO CENTRAL DOCKSUD ENEL DISTRIBUCIÓN GOIÁS FORTALEZA ENEL DISTRIBUCIÓN CEARÁ EGP CACHOEIRA DOURADA CODENSA VOLTA GRANDE ENEL DISTRIBUCIÓN PERÚ ENEL CIEN* EMGESA ENEL GENERACIÓN PERÚ ENEL GENERACIÓN PIURA *TRANSMISSION 70 Annual Report Enel Américas 2017Historical Background companies born from the division changed its name to Enersis S.A. At the Extraordinary Shareholders’ Meeting held on April 11, 2002, the company’s corporate purpose was modified, introducing telecommunications activities and the investment and management of companies whose On June 19, 1981, the Compañía Chilena de Electricidad businesses are in telecommunications and information S.A. created a new corporate structure, which gave birth to technology, and Internet trading businesses. a parent company and three subsidiaries. One of these was Compañía Chilena Metropolitana de Distribución Eléctrica In 1988, and in order to successfully face the development S.A. In 1985, under the Chilean government’s privatization and growth challenges, the company split into five policy, the process of transferring the share capital of business units, which in turn gave birth to five subsidiaries. Compañía Chilena Metropolitana de Distribución Eléctrica Out of these, Chilectra and Río Maipo were responsible S.A. to the private sector begun, and ended on August for electricity; Manso de Velasco was focused on 10, 1987. In this process, the pension fund management electrical engineering and construction services, plus real- companies (AFPs in its Spanish acronym), company estate management, Synapsis in the area of information employees, institutional investors and thousands of small technology and data processing, while Diprel focused on shareholders joined the Company. Its organizational providing procurement and trading of electrical product. structure was based on activities or operative functions whose results were evaluated functionally and its The Company recently went through a corporate profitability was limited by a tariff structure as a result restructuring process that started in April 2015 and was of the Company’s exclusive dedication to the electricity completed in December 2016. This process consisted in distribution business. the division of the electricity generation and distribution activities developed in Chile, from those performed in the In 1987, the Company’s Board proposed forming a division rest of the countries. As such, the former Enersis S.A. for each of the parent company’s activities. Then four was divided and the following companies were born: a) subsidiaries were created to operate as business units Enel Américas S.A., the continuing company of Enersis with its own objectives, thus expanding the company’s with activities in Argentina, Brazil, Colombia and Peru, and, activities towards other non-regulated activities but linked b) Enel Chile S.A. which owns the assets related to the to the main business. This division was approved at the development of the activities in Chile. Extraordinary Shareholders’ Meeting of November 25, 1987 thus defining its new corporate purpose. With this, Today Enel Américas S.A. is one of the largest private Compañía Chilena Metropolitana de Distribución Eléctrica electricity companies in Latin America, both in terms S.A. became an investment holding company. of consolidated assets and also in terms of operating On August 1, 1988, as agreed at the Extraordinary balanced growth in its electricity businesses: generation, Shareholders’ Meeting held on April 12, 1988, one of the transmission and distribution. revenues, which has been achieved through steady and 71 Company’s BusinessExpansion and development 1996 > On December 20, Enel Américas entered the Brazilian market with the acquisition of a large portion of shares in the previously called Companhia de Eletricidade do Río de Janeiro S.A., Cerj, a company that distributes electricity in the city of Río de Janeiro and Niteroi, Brazil, Enel Américas began its international expansion in 1992 whose business name changed to Ampla Energía e with the participation in different privatization processes Serviços S.A. and currently is Enel Distribución Río. in Latin America, thus developing a significant presence in > On December 20, the Company acquired a 99.9% the electricity sectors of Argentina, Brazil, Colombia and shareholding in Central Hidroeléctrica de Betania S.A. Peru. E.S.P, in Colombia. 1992 > On May 15, the Company acquired a 60% shareholding 1997 > On September 5, the Company acquired for US$715 and control of Central Costanera generation company, million a 78.9% shareholding in Centrais Elétricas currently Enel Generación Costanera, located in Buenos Cachoeira Dourada (currently Enel Green Power Aires, Argentina. Cachoeira Dourada), in Brazil. > On July 30, the Company was awarded 51% of Empresa > On September 15, Enel Américas (at that time, Enersis) Distribuidora Sur S.A., Edesur, a company that distributes successfully participated in the capitalization of Codensa electricity in the city of Buenos Aires, Argentina. S.A. E.S.P., acquiring a shareholding of 48.5% for 1993 > In July, the Company acquired Hidroeléctrica El Chocón, US$1,226 million, company that distributes electricity in the city of Bogotá and the department of Cundinamarca, Colombia. The Company also acquired 5.5% of Empresa Eléctrica de Bogotá. today Enel Generación El Chocón, located in the > On September 15, with a total investment of US$951 provinces of Neuquén and Río Negro, Argentina. million, the Company acquired a 75% shareholding of 1994 > In July, Enel Américas acquired for US$176 million the 60% share capital of Empresa de Distribución Eléctrica de Lima Norte S.A., Edelnor (currently Enel Distribución Perú) in Peru. Also the Company acquired Edechancay, another electricity distribution company in that country, Emgesa, a Colombian generation company, and an additional 5.5% of Empresa Eléctrica de Bogotá S.A. > Endesa, S.A. (Spain) acquired 32% of Enersis (currently Enel Américas). 1998 > On April 3, Enersis (currently Enel Américas) again which was later absorbed by the former. invested the Brazilian market, this time being awarded 1995 > On December 12, Enel Américas acquired an additional 89% and control of Companhia Energética de Ceará S.A., Coelce (currently Enel Distribución Ceará), company that distributes electricity in the northeast region of the country, in the state of Ceará. The transaction reached 39% of Edesur. US$868 million. > Additionally, the Company acquired the generation company Edegel (currently Enel Generación Perú) in Peru. 72 Annual Report Enel Américas 2017 1999 > Endesa, S.A. (Spain), took control of Enersis (today Enel Américas). Through a Public Share offering, Endesa 2005 > The subsidiary Endesa Brasil S.A. (today Enel Brasil) was acquired an additional holding of 32% in Enersis, which, formed with all the assets held in Brazil by the Enersis together with the 32% already acquired in August 1997, Group and Endesa Internacional (later it was absorbed resulted in a total holding of 64%. This transaction was by Enel Iberoamérica): Enel Cien, Fortaleza, Enel Green completed on April 7,1999, and involved an investment Power Cachoeira Dourada, Ampla, Investluz and Coelce. of US$1,450 million. As a result of the capital increase made afterwards by Enersis in 2003, this shareholding decreased to the current 60.62%. > On May 11, Enersis (currently Enel Américas) acquired 2006 > In February, Enersis acquired for approximately US$17 35% of Endesa Chile (today Enel Generación Chile), in million the Termocartagena (142 MW) combined cycle addition to the 25% already held, thus reaching 60% power plant in Colombia, which operates with fuel oil shareholding of the generation company. The company or gas. therefore consolidated its position as one of the main > In June, Edegel (currently Enel Generación Perú) and private electricity companies in Latin America. Etevensa were merged, the latter a subsidiary of Endesa 2000 > As part of the Genesis Plan strategy, the subsidiaries Transelec, Esval, Aguas Cordillera and real estate assets were sold for US$1,400 million. 2001 > The Company performed large investments this year: US$364 million for increasing the shareholding in Chilectra (today Enel Distribución Chile), US$150 million in the acquisition of 10% of the share capital of Edesur, in Argentina, a stake that was held by the company’s Internacional (later was absorbed by Enel Iberoamérica) in Peru. 2007 > In September the merger of the Colombian generation companies Emgesa and Betania was completed. > On October 11, Enel S.p.A. and Acciona, S.A. took control of Enersis, through Endesa, S.A., and of Endesa Internacional, S.A. (currently absorbed by Enel SpA.). 2009 > The companies Acciona, S.A. and Enel S.p.A. announced employees; US$132 million to increase its shareholding an agreement whereby Acciona, S.A. will directly in the Brazilian distribution company Ampla; US$23 and indirectly transfer to Enel Energy Europe S.L. the million to increase its shareholding by 15% in Río Maipo, 25.01% shareholding in Endesa, S.A. As such, Enel in Chile, and US$1.6 million to increase its shareholding Energy Europe S.L., controlled 100% by Enel S.p.A., will by 1.7% in Distrilima, in Peru. thus hold 92.06% of the share capital of Endesa, S.A. 2002 > In Brazil, Central Termoeléctrica Fortaleza, located in > On June 25, the agreement between Enel S.p.A. and Acciona, S.A. came into effect whereby Enel became the controller of 92.06% of the share capital of Endesa, S.A. > On October 9, Endesa Chile (currently Enel Generación the state of Ceará, was awarded to the Company. Chile) acquired 29.3974% of the Peruvian generation Additionally, started the commercial operation of the subsidiary Edegel (currently Enel Generación Perú). second phase of the electricity interconnection between Shares were acquired at market price from Generalima Argentina and Brazil, CIEN, completing a transmission S.A.C., a company which in turn is a subsidiary of Endesa capacity of 2,100 MW between both countries. Latinoamérica S.A. Endesa Chile thus now holds directly 73 Company’s Businessand indirectly 62.46% of the shares of Edegel. informed the decision to convene an Extraordinary > On October 15, Enersis S.A. (today Enel Américas) Shareholders Meeting which will take place on acquired 153,255,366 shares, representing 24% of the September 13, with the purpose of resolving, among share capital of its Peruvian subsidiary Enel Generación other matters, the capital increase of the Company for the Perú (formerly Edegel), at a price of 2.72 soles per share. equivalent in Chilean pesos, of up to US$8,020 million or This was purchased from Generalima S.A.C., a Peruvian the amount that the Extraordinary Shareholders Meeting subsidiary of Enel Latinoamérica S.A., the parent determines. In early August, the SVS stated that the company of Enersis. With this transaction, the direct Board of Enersis must adopt the actions necessary to and indirect shareholding of Enersis S.A. in Edelnor rose strictly comply with the conditions established by Articles from 33.53% to 57.53%. 2010 > Enersis (today Enel Américas) accepted the offer of the 15, 67 and Title XVI of Law 18,046 (Corporations Law), considering that they are complementary and when applicable should be considered simultaneously. These conditions are related to capital increase transactions and related party transactions respectively. Once the company Graña y Montero S.A.A., for the acquisition of indications of the SVS were acknowledged, Enersis its entire direct and indirect shareholding in its subsidiary (today Enel Américas) adopted them and continued with Compañía Americana de Multiservicios Limitada, CAM; the capital increase operation. The Board of Directors and in the same way, accepted the offer presented resolve postponing the Extraordinary Shareholders by Riverwood Capital L.P to acquire the entire direct Meeting to take place September 13 to a later date to and indirect shareholding in its subsidiary Synapsis be determined opportunely. After strictly complying with Soluciones y Servicios IT Ltda. The price offered for CAM the conditions established by Articles 15, 67 and Title and its subsidiaries in Argentina, Brazil, Colombia and XVI of Law 18,046 (the Board of Directors requested Peru amounted to US$20 million. In the case of Synapsis, the independent valuation by IM Trust and the Directors the price offered for the company and its subsidiaries Committee requested the independent valuation of in Argentina, Brazil, Colombia and Peru amounted to Claro y Asociados Ltda., the Directors Committee US$52 million. 2011 > In August, Endesa, S.A. informed through a Significant issued its report and each Director gave his opinion with respect to the proposed operation). The Extraordinary Shareholders Meeting held on December 20 ruled on the capital increase. A very large majority, almost 86% of all shareholders present with voting rights, Event, the formalization of a purchase agreement equivalent to 81.94% of the total shares with voting for which Endesa Latinoamérica S.A. (100% owned rights of the Company, approved the capital increase by Endesa, S.A.) acquires 7.70% stake owned by of the following characteristics: 1) Maximum amount of EDP Energias de Portugal S.A. in Endesa’s Brazilian the capital increase: Ch$ 2,844,397,889,381, divided into subsidiaries Ampla Energia e Serviços S.A. and Ampla 16,441,606,297 ordinary nominative payment shares of Investimentos e Serviços S.A. for Euro 76 million and the same series, with no preferences and no par value, Euro 9 million, respectively. After these acquisitions, 2) Value of non-in-kind contributions to be capitalized: Endesa S.A. controlled 99.64% of the share capital of The total issued capital of Cono Sur, Company that will both companies. 2012 > In July, through a Significant Event submitted to the concentrate the activities that are identified in the reports that have been made available to the shareholders and that would be contributed by Endesa(currently Enel Generación Chile) to Enersis (currently Enel Américas), will amount to Ch$ 1,724,400,000,034 corresponding Superintendence of Securities and Insurance (SVS), to 9,967,630,058 shares of Enersis S.A. (today Enel the Board of Directors of Enersis (today Enel Américas) Américas) at a price of Ch$ 173 per share, 3) Placement 74 Annual Report Enel Américas 2017share price: a fixed price of Ch$173 for every payment result Enel S.A. reached the direct control of Enersis share to be issued as a result of the capital increase. (today Enel Américas) with 60.62%. 2013 > Capital Increase: With an historic result for this type of 2015 > On April 28, 2015, the Board of Directors of Enersis operation in the local market, shareholders of Enersis (currently Enel Américas) agreed to initiate the studies (today Enel Américas) subscribed a total of approximately for a possible corporate reorganization to divide the $ 6,022 million, a placement of 100% of the shares generation and distribution activities in Chile from the available for the capital increase. rest of the activities developed abroad by Enersis and > In July, the new Malacas 185 MW power plant was its subsidiaries Endesa Chile and Chilectra (today Enel commissioned in Piura, Peru, company owned by Américas). Empresa Eléctrica de Piura (EEPSA) part of the Enersis > On November 16, 2015, the commissioning of El Quimbo Group (today Enel Américas Group). This new power power plant, a 400 MW hydro facility in Colombia took plant required an investment of US$105 million. place, after five years of construction. > On November 6 the first modernized unit of Salaco > On December 18, 2015 the Extraordinary Shareholders project in Colombia was commissioned, corresponding Meeting took place, where the shareholders of the to unit 2 of the run-of-the-river Darío Valencia Samper Company approved the corporate restructuring of plant, with an installed capacity of 50 MW. This unit Enersis and its subsidiaries Endesa Chile and Chilectra generated 46.3GWh since it’s commissioning until (today Enel Américas). midnight, December 31 at 24 hours. 2014 > Public Tender Offer for the shares acquisition for Coelce. 2016 > On March 1, the non-material Division of the former Enersis, Endesa and Chilectra was made, as a result On January 14, Enersis (today Enel Américas), which of which Enel Chile, Endesa Américas and Chilectra until then controlled 58.87% of its subsidiary Coelce, Américas were born. launched a voluntary OPA of all series of shares issued > On April 21, 2016, shares’ Division of Enersis, Endesa and by Coelce at a price of R$49 per share. With this, Chilectra became effective, and the resulting companies Enersis acquired 3,002,812 common shares, 8,818,006 - Enersis Américas, Enersis Chile, Endesa Américas, preferred shares type A and 424 preferred shares type Endesa Chile, Chilectra Américas and Chilectra Chile – B, equivalent to an investment of approximately US$243 began trading at the Santiago Stock Exchange. Likewise, million. After the operation, the company obtained a the ADR’s ENIA, ENIC, EOCA and EOCC began trading 74.05% direct and indirect interest in Coelce. on April 27 the same year at the New York Stock > In April, Enersis (today Enel Américas) closed an Exchange. (NSYE). acquisition agreement for the purchase all the shares > On September 28, the Extraordinary Shareholders’ that Inkia Americas Holdings Limited indirectly had of Meeting took place at the Enersis Stadium, where the Generandes Perú S.A., equivalent to a 39.01% stake, Merger of Enersis Américas, Endesa Américas and whose investment amounted to US$413 million. The Chilectra Américas was approved, and comprised the transaction ended in September, and as a result Enersis following: on the part of Enersis Américas, it absorb (currently Enel Américas) reached 58.60% shareholding Endesa Américas and Chilectra Américas. The main of Edegel (today Enel Generación Perú). purposes of The Merger were: 1) Align every investment > On July 31, 2014, Enel Energy Europe S.R.L., currently interests in generation and in distribution in the scope of Enel Iberoamérica SRL, controller of Endesa S.A. Latin America; 2) Create a simpler structure with greater (92.06% share) proposed the acquisition of 100% of the share capital of Endesa Latinoamérica S.A. The transaction was completed in October 2014, and as a 75 Company’s Business76 Annual Report Enel Américas 2017visibility, and eliminate the cross participations; 3) such, the Company proceeded with the exchange of Greater efficiency and dynamism in the decision making shares and the merger is achieved. processes, costs reduction and remove any potential conflicts of interest. > On September 13 the Public Tender Offer for the shares acquisition (OPA) for the shareholders of Endesa 2017 > On February 1, in Argentina the National Electricity Américas was launched. The price was $300 pesos per Regulatory Entity (ENRE for Spanish acronym) approved share. This operation ended on October 28. the Integral Tariff Review – known as RTI - defining a > On September 29 started the period to exercise the structural change in energy distribution in the country. Withdrawal Right of dissenting shareholders. The This new regulation is the result of an extensive work established prices were the following: Enersis Américas made between the government and the distribution $112.02 pesos, Endesa Américas $299.64 pesos companies involved in the tariff revision process, and Chilectra Américas $472.79 pesos. The period to consisting on a gradual increase of the tariff with the exercise the Withdrawal Right ended on October 28. purpose of softening the impact for the final consumer. > On December 1, the name change of Enersis Américas > On February 14, Enel Américas completed the acquisition to Enel Américas took place, after the intangible merger of Celg Distribuição S.A. (now Enel Distribución Goiás) with the companies Endesa Américas and Chilectra through its subsidiary Enel Brasil with the acquisition Américas. of nearly 94.8% of its share capital. This distribution > On November 30 it was announced that the Company company has more than 2.9 million clients and operates presented the best offer for the acquisition of the in the Brazilian region of Goiás. The amount of the electricity distribution company CELG-D, which was operation reached BRL$ 2,187 million (approximately performed within a bidding process arranged by the US$640 million). The financing of this transaction came Brazilian Government through Banco Nacional do from the capital increase of Enel Américas (former Desenvolvimento. The offer presented by our subsidiary Enersis) approved by the end of 2012. Enel Brasil amounted to BRL$ 2,187 million. > In July, Enel Américas and Enel Chile inaugurated their > On December 29 Endesa Américas and Chilectra offices in New York, whose main purpose is to manage Américas ceased trading at the Santiago Stock Exchange the relationships with institutional investor and financial and the New York Stock Exchange, in the ADR form. As analysts, credit rating agencies and institutions of the securities markets in the United States (for example Citibank, New York Stock Exchange-NYSE, etc.). > On October 4, Enel Perú (100% owned by Enel Américas S.A.) acquired 47,686,651 shares issued by the subsidiary Enel Distribución Perú. The transaction closed at a total price of PEN$ 262,276,580 (equivalent to approximately US$ 80 million) and was carried out at the Lima Stock Exchange. > On September 27, Enel Brasil was awarded the concession to operate Volta Grande power plant, whose installed capacity is 380 MW. The amount of the transaction reached BRL$1,420 million (US$ 445 million approximately). This term of the concession is 30 years. 77 Company’s Business13Investments and financial activities 78 Annual Report Enel Américas 201779 Letter from the ChairmanMaterial Investments Related to the Company’s Investment Plan The global financing strategy of the Group’s subsidiaries and intercompany loans is coordinated in order to optimize debt management, in addition to the terms and conditions Outside Chile Capital expenditures (1) (million US$) 2018-2020 5,233 2017 1,371 2016 1,230 2015 2,081 of our funding. The Group’s subsidiaries develop independent capital investment plans that are funded by funds generated internally or by direct funding. One of our goals is to focus on those investments that will yield long-term benefits, such as projects to reduce energy losses. Additionally, focusing on Enel Group and seeking to provide services to all companies in the group, our goal is to reduce investment at the individual subsidiary companies in elements such as procurement systems, telecommunications and information systems. While we have studied how to finance these investments as part of the budget process of the Company, no particular financing structure has been committed and our investments will depend on market conditions at the time they need to get the cash flow. (1) Capex figures represent the effective payments for each year, with the exception of future forecasts. Capital expenditures in 2017, 2016 and 2015 Our investment plan is flexible enough to adapt to the three years were mainly related to El Quimbo project (400 changing circumstances by giving different priorities to MW) in Colombia, and to the maintenance of the existing each project according to its profitability and strategic installed capacity. El Quimbo project began commercial consistency. Investment priorities are currently focused operations on November 16, 2015. In the generation business, capital expenditures in the last on developing the works plan in Brazil, Colombia and Argentina. In the distribution business, investments were the following: (i) expand our distribution service to meet For the period between 2018 and 2020, we expect to spend the growing energy demand, (ii) improve the quality of US$5,233 million on a consolidated basis, in investments service, (iii) improve safety, and (iv) reduce energy losses, in the subsidiaries we control, and related to investments particularly in Brazil. currently under development, the maintenance of our distribution networks, maintenance of existing generation The aforementioned capital investments were financed as plants, and the studies required to develop other potential follows: generation projects. > El Quimbo: Local and international bond issuances. The chart below shows the capital expenditures expected to carry out from 2018 to 2020 and the capital expenditures incurred by our subsidiaries in 2017, 2016 and 2015. 80 Annual Report Enel Américas 2017 Generation enabled the expansion of the SE Pompeya, new feeders SE Movil Roca, and technological improvements of the RED (digitization). Capital expenditures in generation amounted to US$ 253 million in 2017, and in 2016 totaled US$ 291 million. In Peru, energy demand is related to requirements from customers, which has generated investments in In 2017 in Peru, maintenance capex reached US$ 61 distribution networks of US$ 75 million, US$ 37 million million. Some of the main projects are: the reconstruction of which were used for the expansion and reinforcement of Callahuanca power plant (US$ 12 million), the acquisition of networks to meet the requirements of residential, of contingency parts for thermal units (US$ 11 million), commercial and industrial customers, and US$ 28 million several maintenance activities and the modernization of to ensure quality and safety of the supply. With regards civil works and hydraulic units (US$ 10 million), Project to Sub-Transmission, investments in capacity expansion for the Thermal Units Duality (US$ 4 million) and overhaul and safety of the networks and transmission lines reached of thermal units (US$ 8 million). Expansion capex were US$ 33 million. Additionally US$ 7 million were assigned focused on the TG6 project (US$ 8 million) and the HER to Energy Losses Control and US$ 8 million to information Huampaní Project (US$ 2 million). services and infrastructure. In Colombia, maintenance capex were focused on projects In distribution in Brazil, total capex reached US$ 827 million. related to the improvement of the generation plants’ In particular, Enel Río performed investments for a total of assets, among which the beginning of the environmental US$349 million for the implementation of new connections, improvement plan for Termozipa stands out. In relation improvement of the quality of distribution networks and to expansion capex, progresses were made in the works energy losses reduction projects. Enel Distribución Río for the closing of El Quimbo hydroelectric project and the performed investments in control systems through the expansion capex of Termozipa. use of technology and social activities. Investments of Distribution Enel Distribución Ceará totaled US$ 227 million with the purpose of meeting the network demand and connections of clients and support the sustained growth of demand in the State of Ceará, including projects for the capacity increase of energy transport. Enel Distribución Goiás performed investments for a to total of US$ 250 million During 2017, the Company’s capex amounted to US$ to meet the network demand and clients’ connections, 1,430 million, mainly to meet consumption needs, as services for quality improvement and losses reduction. a result of the growth of population and the entrance of new customers, through investments not only related with In Colombia, capex of Codensa reached US$ 266 million, them, but also in capacity increases and strengthening being mainly focused on projects that improve the quality of AT, MT and BT of the companies. Conversely, in 2016 of service, energy losses control and new connections, capex reached US$ 923 million. with the objective of recovering quality and energy losses During 2017 Edesur in Argentina carried out investments Cundinamarca, and the replacement of network and for US$ 213 million in order to meet the growth of demand network assets in the Cundinamarca area after the merger and improve the quality of service. These investments process. standards after the merger with Empresa de Energía de 81 Investments and Financial ActivitiesFinancial activities Finance Finally, Peru recorded 2.6% growth in 2017, which is below initial estimates, mainly explained by lower internal demand and the slowdown of investments in fixed assets due to political instability. Additionally, the country was affected by heavy flooding caused by the El Niño climatological effect. The latter brought an inflationary shock at the beginning of the year and strong losses in the productive sector. In the international macro scenario, the activity of developed countries and some emerging economies have explained During 2017 South America, and particularly the countries where the greater dynamism and global growth in relation to Enel Américas operates, experienced a positive economic previous years, mainly in relation to the industry, by boosting development and growth, but still below the estimated growth global commerce and trading. potential. As such, Argentina, Brazil, Colombia and Peru have shown growth rates below 3%. Chile has been even lower Central banks of the greater economies acted cautiously with 1.5% growth of the economy in 2017. during 2017 in relation to the gradual withdrawal from the During the year, Argentina continued the policies for greater recent and deep economic crisis. During 2017, financing monetary stimulus, which was very helpful to overcome commercial openness through reforms aimed at boosting rates remained relatively low. investment. Economic growth improved from a negative 2.3% in 2016 to a positive 2.9% in 2017, which reflects an The financial markets kept open in the countries where Enel improvement of internal conditions, mainly explained by Américas has presence, which enabled its subsidiaries to greater demand. However, inflation remained high at nearly have access to the resources required to finance its projects 24%. In the financial area, rating agencies have supported and investments and also to continue with debt refinancing the improvement of economic growth projections through at longer terms, thus complying with a policy that promotes higher credit risk ratings. For example, in 2017 Moody’s the control of financial risks. rating agency increased the credit risk rating of sovereign bonds from B3 to B2. In 2017 Brazil has shown signs of economic recovery, moving from a deep recession in 2016 where GDP decreased 3.5%, to an estimated growth of 1% in 2017. This improvement was driven by higher demand and investments, lower inflation and therefore reduced interest rates. Moreover, unemployment decreased and activity has shown signs of economic recovery and greater dynamism. During the year Brazil also was affected by the political instability of the previous years, which even involved the President of the Republic, bringing volatility to the markets. In Colombia, 2017 was a year of slower economic activity. Growth decreased from 2% in 2016 to 1.7% in 2017, the lowest growth rate in 8 years. Lower dynamism, together with the strong inflation reduction, led a fall of monetary policy rate from 7.75% at its peak in 2016 to 4.75% by the end of 2017. The political year was marked by the progress in the peace process in Colombia with the incorporation of guerrilla groups to civilian life. 82 Main completed financial operations For Enel Américas, 2017 was a year marked by expansion and growth particularly in Brazil. The most important milestones were the acquisition of the distribution company Enel Distribución Goiás (previously Celg), located in the state of Goias, and the awarding of the rights for the concession to operate the hydroelectric generation company Volta Grande, in the state of Minas Gerais. These acquisitions meant the consolidation of the leadership of Enel Group through Enel Américas in the region, while consolidating significantly its presence in Brazil. In this context, the companies of the Group carried out various financing operations: Annual Report Enel Américas 2017Brazil Enel Distribución Rio (Ampla) closed a bank financing of BRL$250 million (US$76 million). Likewise, obtained financing from Banco Nacional de Desenvolvimento Econômico e Social (BNDES) for the development of its investment program for a total of BRL $514 million (US$ 155 million). Towards the end of the year, the company performed a bond issuance of BRL$ 600 million (US$ 181 million) for bonds refinancing. Enel Distribución Ceará (Coelce) issued short term Promissory Notes in the local market of BRL$ 400 million (US$ 121 million). The company also issued local bonds and long-term infrastructure bonds towards the end of the year of BRL$ 500 million (US$ 151 million), which were used for the prepayment of Promissory Notes and for investments financing. Enel Fortaleza received a bank financing of BRL$ 190 million (US$ 57 million). The recently acquired distribution company Enel Distribución Goiás received two bank financings of a total amount of BRL $550 million (US$ 166 million). Coverage Policy Exchange Rate The exchange rate hedging policy of the Group is based on cash flows and seeks to maintain a balance between flows indexed to foreign currency, and the levels of assets and liabilities denominated in that currency. The goal is to minimize the flows’ risk exposure from changes in exchange rates. As part of this policy, the Enel Américas contracted forwards for US$ 355 million to cover the flows in different currencies coming from foreign subsidiaries. The company also performed investments in financial assets during the year, including among others the awarding of the rights for the concession to operate the generation power plant Volta Grande, with which the company needed to contract hedging for US$ 369 million. Overall, Enel Américas operated forward derivatives contracts for more than US$ 720 million during 2017. The new company of Enel Brasil group, EGP Projetos I, obtained a bilateral bank loan of BRL$ 860 million (US$ 260 Interest rates million) for the acquisition of the hydroelectric generation Interest rates variations change the fair value of those power plant Volta Grande. assets and liabilities that accrue variable interest rate, as Colombia Codensa performed a local bond issuance of COP$ 630,000 million (US$ 211 million). Peru well as the future flows of asset and liabilities referenced to a variable Interest rate. The objective of risk management is to reach a balance of debt structure, in order to minimize the cost of debt with reduced volatility in the income statement. Depending on the Group’s estimations and the objectives of debt structure, hedging transactions would be made through derivatives contracts that mitigate those risks. The instruments currently used are interest rate swaps to fixed variable rates. Enel Distribución Perú (Edelnor) performed a local bond issuance of PEN $100 million (US$ 31 million). In addition, By the end 2017, the comparative structure of financial debt the entity signed two bank-leasing contracts for the of Enel Américas Group in relation to fixed interest rate financing of transmission lines and the construction of a and/or protected interest rates versus gross total debt, transmission substation of PEN$ 37 million (US$ 11 million). after contracted derivatives was 46% of fixed rate debt. 83 Investments and Financial Activities Credit Risk Rating International Ratings Enel Américas S&P Moody’s Fitch Corporate BBB / Stable Baa3 / Negative BBB+ / Stable On November 9, 1994, Standard and Poor’s and Duff & Phelps rated Enersis (today Enel Américas) for the first time at BBB +, that is, an investment grade company. Later, in Local Ratings 1996, Moody’s rated the company’s foreign currency long- term debt at Baa1. Over time, most credit ratings have changed. Currently, they are all “investment grade”, which is based on the diversified portfolio of assets, liquidity and adequate policies of debt coverage service. In summary, the following main events that took place in 2017 are detailed below: On February 27, 2017, Standard & Poor’s reviewed and Enel Américas Feller Rate Fitch Stocks Bonds 1st class, Level 2 1° class, Level 1 AA- / Stable AA / Stable Properties and facilities ratified the corporate rating of Enel Américas, assigning a Enel Américas as a “holding” entity, does not directly own “BBB” rating. Outlook is stable. properties or facilities to develop its business. Then, on July 25, 2017, Feller Rate rated Enel Américas in local scale rating and assigned “AA-” rating with stable outlook. Furthermore, on September 13, 2017, Fitch Ratings assigned Brands international scale rating to Enel Américas in “BBB+” and The company has registered “Enersis” and “Enersis national scale the rating in “AA (cl)”, with stable outlook for Américas” brands in services, products, industrial both ratings. and commercial facilities. In July, 2016, through a communication addressed to the Board of Enel Américas Finally, on December 22, 2017, Moody’s reviewed Enel S.A., Enel S.p.A authorized the free use of “Enel” brand Américas rating and assigned a “Baa3” rating with stable to Enel Américas S.A., being entitled to include it to its outlook. Then, on February 23, 2018, the agency changed business name, its logo and other forms of use. the Outlook to negative due to the situation in Colombia. Ratings are supported by the Company’s diversified portfolio of assets, strong credit parameters, adequate debt structure and high liquidity. The brand “Enel Américas” is duly registered. 84 Annual Report Enel Américas 2017Suppliers, Customers and Main Competitors SolutionsS.A.,Reivax Automacao e Control, Roberto Carlos Castro & Cia Ltda., Balteau Productos Eletricos Ltda., Energisa Solucoes S.A., Paradigma Business Solutions As, Reivax S/A Automacao e Controle, Roberto Carlos Castro & Cia Ltda, Banco Bankpar S.A, Cedae- Estac. de Tratam de Agua – Dpt., Coop El Rural Cach Itaborai, Prolagos S.A. Eta Juturnaíba, CRH Cantagalo, Industria de Cimentos Telemar Norte e Leste S.A., State Grid, Aes, Cemig, Neoenergia, Light, Cagece Cia. de Agua e Esgoto Do Ceara, Cogerh Barragem Do Rio Maranguapinho, Cearaportos Cia. de Int Port Do Ceara, Enel Américas S.A. in its capacity of a “holding” company Seduc Colegio Liceu Do Ceara, Sesa 18 Cres Iguatu, that mainly operates in the field of electricity generation Ferbasa, Multiplan, Volkswagen, International Paper, and distribution in Latin América, considers the following Vicunha Têxtil, Chesf, Furnas, Eletronorte, Petrobras, suppliers, customers and competitors as the most relevant CEMIG, CTG Brasil, Copel. ones for its main subsidiaries. The Company established that its main suppliers, S.A. E.S.P., Aes Chivor & Cia. S.C.A. E.S.P., Empresa customers and competitors are the following: de Energía del Pacífico S.A. E.S.P., Electrificadora Del > Colombia: Empresas Públicas de Medellín E.S.P., Isagen Caribe S.A, Compañía Energética del Tolima, Magaldi > Argentina: Wartsila Argentina S.A., IMC SRL -Mei SRL Power S.p.A., Consorcio Chivor, Ingenierias Triturados – UTE, Zeppilli Enrique Félix, Turismo Patagonia S.A., y Concretos, Andritz Hydro Ltda., Carpi Tech BV EMCO Limited, Argencobra S.A., Mor S.A., Rowing Amsterdam Balerna Br, Empresas Públicas de Medellín, S.A., Nizza Davidson Ing. y Obras S.R.L., Valtellina Sud Cens S.A. E.S.P.,Electrificadora del Huila S.A., Empresa America S.A., Imsa Sac E I, SIEMENS Energy Inc., de Energía de Boyaca, Ecopetrol, Productos Familia Corrosión Industrial Mantenimientos, Servimagnus S.A., Cencosud, Eaab, Carvajal, Alumbrado Público S.A. - SDC Do Brasil Serv., Hugo Torbidoni y Cía. S.R.L., Distrito Capital, Productos Familia S.A., Zona Franca Techint Compañía Técnica Internacional, GCBA, AYSA S.A., Iberplast S.A., Hilanderías Universal S.A., EEPPM, S.A., Mun. Quilmes, Coto C.I.C.S.A. Suc, Metrovias ISAGEN, DICEL, EPSA. S.A., SADESA, AES, Pampa, Petrobras, YPF Energía (Ex Pluspeteg). > Peru: Indeco S.A., 3M Perú S.A., Hermes Transportes Blindados S.A., CAM Servicios del Peru S.A., Silicon > Brazil: Mechal Serv e Infraestrutura Ltd., Engeform Technology S.A.C., Siemens Energy, Inc. Confipetrol. Construcoes e Comercio Lt., Compel Construcoes, Andina S.A., Servicios Generales Hidraúlicos y Cia., Endicon Eng. Instal e Construcoes, Soter Sociedade Siemens S.A.C, Andritz Hydro AG, Luz del Sur, Minera Técnica de Engenharia, Cia Gestao dos Recursos Hidricos, Chinalco Perú, Hudbay Perú, Votorantim Metais Alstom Ingegneria e Ricerca SÁ, Fundacao Ampla de Cajamarquilla, Engie, Electroperú, Kallpa Generación. Seguridade Social, ABDO, Ellery & Asociados Consult, Statkraft, Corporación Celima, Lima Airport Partners Energía Solucoes S.A., Antonio Esio Guerra Biserra, Nova S.R.L., Compañía Industrial Nuevo Mundo S.A., Rio Servicos Gerais Ltda., Rede Independente Jornais Tecnologia Textil S.A., Gym Ferrovias S.A., Termoselva, Do Nordes, Sintese Industria E Comercio Ltda, Loca Coelvisac, Fénix Power Perú. Buggy Automoveis - Carlos Agui, Paradigma Business > Chile: Travel Security S.A., Merrill Lynch Pierce Fenner & Smith, Deutsche Bank Securities Inc., Ernst & Young Servicios Profesionales, DCV Registros S.A. 85 Investments and Financial Activities 14Risk Factors 86 Annual Report Enel Américas 201787 Letter from the ChairmanRisk Management Policy The companies of Enel Américas Group are exposed to determined risks that are managed through the application of a system to identify, measure, limit the concentration and supervise. Some of the underlying principles defined by the Group in the establishment of their risk management policy are: > Comply with the norms of good corporate government. > Strictly complying with the normative system of the Group. > Each business and corporate area defines: I. The markets where the Company can operate in relation to the knowledge and sufficient capabilities to ensure effective risk management. II. Criteria on counterparts. III. Authorized operators. Interest Rate Risk Interest rate variations modify the fair value of those assets and liabilities that bear a fixed interest rate, and also the aforementioned future asset and liabilities flows at a variable interest rate. The objective of risk management of interest rates is to reach a debt structure equilibrium that allows a minimization of cost of debt with a reduced volatility in the income statement. The Company performs coverage transactions through derivatives contracts to mitigate these risks depending on the estimations of the Group and the objectives of the debt structure. The instruments currently used are interest rate swaps that sets variable to fixed rate. The comparative structure of the financial debt that Enel Américas Group has, according to the fixed interest rate and/or protected by the total gross debt, after contracted derivatives, is the following: > The business and corporate areas established for each market in which they operate their predisposition to coherent risk with the defined strategy. Gross Position > Every business operations and corporate areas are performed within the approved limits in every case. Fixed interest rate 12-31-2017 % 12-31-2016 % 46% 44% > The business, corporate areas, lines of business and companies establish risk management policies necessary to ensure that the market transactions are completed according to policy, norms, and the procedures of Enel Américas. 88 Annual Report Enel Américas 2017Exchange Rate Risk Commodities Risk Exchange rate risks fundamentally correspond to the variation risks, mainly through the following: following transactions: > Fuel purchases in the process of electricity energy The Enel Américas Group is exposed to commodities price > Debt contracted by the Group’s companies denominated generation. in a different currency of which the flows are indexed. > Energy purchase-sell operations that take place in the > Payments to be made related to the acquisition of local markets. materials associated to projects and corporate insurance policy payments being made in a different currency of With the objective of reducing risk in situations of severe which the flows are indexed, among others. drought, the Group has designed a commercial policy defining the level of commitment of energy sales according > Revenues of the companies of the Group that are directly to the generation capacity of power plants in a dry year, linked with the evolution of currencies not related to the including risk mitigation clauses in some contracts with free companies’ flows. clients. In the case of regulated clients, they are subjected to a long-term tender process, and indexing polynomials are > Flows from the subsidiaries abroad to the head offices determined enabling the reduction of commodities exposure. in Chile, which are exposed to exchange rate variations. Considering the operational conditions that face electricity With the objective of mitigating the exchange rate risk, generation, hydrology, and commodities price volatility in Enel Américas’ hedging policy for exchange rates is based the international markets, the Company is permanently on cash flows and contemplates to maintain a balance verifying the convenience of taking coverage positions to between the flows indexed in dollars and the levels of reduce the impacts of price variations in results. assets and liabilities denominated in that currency. The objective is to minimize the exposition of the cash flows to On December 31, 2017, the company signed operations of variations in the exchange rates. purchase future energy contacts 5.4 GWh, for the period The instruments currently being used to comply with policy selling contract in the Colombian wholesale market. are currency swaps and exchange rate forwards. Likewise, the policy seeks to refinance debt in the functional currency On December 31, 2017, selling contracts for 24.23 GWh and of each company. purchase future energy contracts for 77.45 GWh were settled January-March 2017. These purchases back up an energy- On December 31, 2016, operations of purchase future energy contracts amounted to 69.84 GWh, for the period January-December 2017. These purchases backed up an energy purchase contract in the wholesale market. For its part, future energy sale contracts amounted to 15.12 GWh in the period January-December 2017, associated with the coverage of cash flow risks of clients indexed in the Unregulated Market. As of December 31, 2016, ten sales contracts and one future energy purchase contract were liquidated, each of them amounted to 0.36 GWh. 89 Risk FactorsLiquidity Risk The Group maintains a liquidity policy consistent with the contract of committed long-term credit facilities and temporary financial investments, in sufficient amounts to support the projected needs for a period of time related to the context and expectations of the debt and capital markets. Receivable Commercial Accounts With regards to credit risk related to the receivable accounts coming from commercial activity, this risk is historically very The aforementioned projected needs include net financial limited given the short term client’s recovery time, so they debt maturities, after financial derivatives (For further details do not individually accumulate a significant amount. This is regarding the features and conditions of financial debt and applicable for both our electricity generation and distribution financial derivatives see Notes 19, 21 and Appendix 4 of businesses. the 2017 Financial Statements). In some countries in our line of business of electricity As of December 31, 2017, the liquidity of Enel Américas generation, the company may face a supply disruption due Group reached US$1,473 million in cash and cash to the lack of payment, and also in almost every contract equivalents, and US$225 million in available non-committed it’s considered lack of payment as cause for terminating the long-term credit facilities. On December 31, 2016, the contracts. For this end, the credit risk is constantly monitored Enel Américas Group accounted a liquidity of US$2,689 and its measured in maximum amounts exposed such risk. million in cash and cash equivalents, and US$130 million in In the case of our electricity distribution companies, the available long -term uncommitted credit facilities. supply disruption in all cases is our company’s decision facing our client’s lack of payment. This is implemented according to the existing regulation in each country, which facilitates the evaluation process and credit risk control, which is also limited. Credit Risk Enel Américas performs a detailed monitoring of its credit risk. Financial Assets Cash surplus investments are made by top of the line national and international financial entities, with limits established by each institution. In the bank selection for investments, the ones considered are those that have an investment grade credit risk rating, considering the three main international rating agencies (Moody’s, S&P and Fitch). Placements can be backed up by treasury bonds of the country where the operation takes place and/or bank securities issued by top of the line banks, privileging the latter because they offer greater returns (always following the existing placement policies). 90 Annual Report Enel Américas 2017 Measuring Risk Other Risk Factors The Enel Américas Group develops a Value at Risk Some South American economies have historically measurement for its debt positions and financial derivatives, been characterized by frequent and, occasionally with the objective of monitoring the risk assumed by the drastic, interventionist economic measures by their company, limiting the volatility of the income statement. governmental authorities including expropriations, which may adversely affect the business and financial The portfolio includes for the calculation of the Value at Risk results of Enel Américas. composed by: > Financial Debt. Government authorities have modified monetary, credit, tariff, tax and other policies with the purpose of influencing > Derivatives for Debt coverage. the direction of the economies of Argentina, Brazil, Colombia and Peru. Although Enel Américas has no assets The calculated Value at Risk represents the possible variation in Chile, it’s a company constituted under the laws of the of the portfolio’s value previously described in the duration Republic of Chile. Therefore it’s subject to changes in tax, of a quarter with 95% confidence. For that purpose there is labor and monetary laws, among others. Other government a volatility study of the risk variables that affect the position actions carried out in these South American countries have portfolio’s value, including: also included wages, process and tariffs controls, and other interventionist measures such as expropriation and > Libor for the US dollar. nationalization. > The different currencies in which our company operates, the regular local indexes for banking transactions. In the distribution business, if a certain service and technical > Exchange rates of the different currencies considered in standard is not met, there is a risk of losing concessions. the calculations. In some concessions, such as Buenos Aires and Rio de Janeiro, it may be especially difficult to meet some of the The Value at Risk calculations are based on the extrapolation minimum standards required. In the event that it is not of future scenarios (in one quarter) of the market values possible to comply with these regulatory standards, the of the risk variables in terms of the scenarios based on local power regulator might revoke the concession and real observations for the same period (quarter) during five reallocate it to a competitor. years. Changes in government and monetary policies on tariffs, The Value at Risk of a quarter with a 95% of confidence is exchange controls, regulations and taxation may reduce calculated as a 5% percentile more adverse of the possible the profitability of the Company. Inflation, devaluation, variations in the period. social instability, and other political, economic or diplomatic Considering the hypothesis described above, the Value at the region’s governments, may also reduce the Company’s events, including the response to these circumstances by Risk in a quarter of the positions described corresponds to profitability. US$ 212,497 thousand. This value represents the potential increase in the debt and extent on hydrological conditions, drought conditions, derivatives portfolio, so this value at risk is directly related, flooding and other weather conditions may adversely among other factors, to the value of the portfolio at the end affect the operations and profitability Since the Company’s businesses depend to a large of each quarter. 91 Risk FactorsIn 2017 approximately 55% of the consolidated installed Operational costs of thermoelectric plants can be generation capacity was hydroelectric. As such, the considerably higher than the costs of hydroelectric plants. extreme dry hydrological conditions can adversely affect Operational expenses increase considerably during the Company’s business, the operational results and its drought periods, when thermoelectric power plants are financial condition. The hydrological condition of the region dispatched more frequently. Also, depending on our has been frequently affected by two weather phenomena commercial commitments, we may have to purchase —“El Niño” and “La Niña”— which had an impact on rains electricity from the spot market in order to comply with and have resulted in droughts, affecting the Company’s all our contractual supply obligations and the cost of these ability to distribute energy from its hydroelectric facilities. purchases of electricity may exceed the price at which we In Brazil, where 76% of the Company’s installed capacity is must sell the contracted electricity, thus causing losses for hydroelectric, authorities were forced to make regulatory these contracts. changes by modifying the maximum price limit, which is reviewed annually and is consequence of the low Droughts also have an effect on the operation of hydrological contributions registered since 2014; the latter thermoelectric power plants, including facilities that use also had a direct impact in the short-term electricity market natural gas, diesel, or coal as fuels, as follows: resulting in an increase of thermal dispatch and spot prices. The Brazilian regulation considers a relocation mechanism • Thermal plants require water for cooling and droughts that allow hydroelectric generators with energy deficit to not only reduce the availability of water, but also buy energy at the prices established by other generators increase the concentration of chemicals such as with superavit; nevertheless, due to the existing drought, sulfates in water. The high concentration of these every energy generation company had deficits in relation chemicals in the water used for cooling increases the to their supply contracts, therefore these companies were risk of damage to the equipment of the thermoelectric forced to buy energy in the spot market at higher prices, plants, as well as the risk of infringing relevant approximately BRL$ 10 per MWh, which is against the environmental regulations. As a result, water may price limits established for 2017 and 2018 of approximately have to be purchased from agricultural areas, which BRL$ 12 per MWh. are also experience water shortages. These water purchases can increase the operational costs and Likewise, the “El Niño” phenomenon has affected force the negotiation with local communities. hydrological conditions in Colombia in the past, where 88% of the installed capacity is hydroelectric, leading to • Thermal power plants that burn natural gas generate a scarcity of precipitations and high temperatures during emissions such as nitrogen oxide (NO), carbon the period, and therefore to an increase in energy prices. Each event of “El Niño” is different and, depending on its intensity and duration, the magnitude of its social and economic effects can be more material. Peru has also experienced a shortage of rainfall, especially towards the dioxide (CO2) and carbon monoxide (CO) gases. When operating with diesel they release NO, sulfur dioxide (SO2) and particulate matter into the atmosphere. Coal fired plants generate emissions of SO2 and NO. Therefore, greater use of thermal plants during periods end of 2016 and high volatility of hydrologic conditions of drought generally increases the risk of producing a during 2017. Even though the installed capacity in Peru is higher level of pollutants that could lead to penalties if mainly thermoelectric, extreme hydrological events have emissions are above certain levels. affected non-thermal power plants. In March 2017, “El Niño Costero” phenomenon in Peru caused unusually The recovery from the drought that affected the regions heavy rains that caused the temporary stoppage of where most of the hydroelectric power plants of the several hydroelectric power plants due to the overflowing company are located can last for a prolonged period of of rivers, and by the end of the year river levels that feed time and new episodes of drought may occur in the future. power plants were below historical average levels. These A prolonged drought may exacerbate the risks described situations explain the high volatility of marginal costs. above and have an adverse effect on Enel Américas business, operational results and financial condition. 92 Annual Report Enel Américas 2017The distribution business is also affected by climatic Electricity businesses may be subject to regulatory fines conditions. For example, moderate temperatures may for any breach of current regulations, including power decrease the use of heating or air conditioning, thus outages, in the four countries in which the Company affecting energy consumption. Even under extreme operates. temperatures, demand can increase significantly in a short period of time, which could affect service and result in The generation subsidiaries of the Group are supervised an interruption of supply with the additional risk of being by local regulators and may be affected by these fines in fined by the authorities. Depending on weather conditions, cases where, in the opinion of the regulator, operational the results obtained by the distribution business can vary failures that affect the regular supply of energy to the significantly from year to year. system are the responsibility of the company as when, for Government regulation may adversely affect the system operator. In addition, subsidiaries may be required example, there is no coordination of the agents with the Company’s business. to pay fines or compensate customers if subsidiaries can’t provide electricity, even if such non-compliance is Enel Américas’ subsidiaries are subject to extensive due to forces beyond the subsidiaries’ control, or if they regulations on tariffs that are charged to its clients and don’t comply with environmental or other regulation. As other aspects of the business, and these regulations may of December 31, 2017, fines imposed to Enel Distribución have an adverse impact on the Company’s profitability. Ceará amounted to the equivalent to US$ 23 million and For example, governments in the countries where the were related to 49 fines imposed by various reasons, Company operates may implement rationing policies including relationships with clients, non-compliance with during droughts or prolonged failures in rationing services, regulations and environmental standards, non-compliance which could adversely affect the Company’s business, with labor regulations and with fiscal rule. operational results and financial condition. Government authorities could delay the distribution tariff on payments from its subsidiaries and associate To meet payment obligations, Enel Américas depends revision process, or the tariff adjustments determined companies. by the authorities could be insufficient to pass the costs to clients, as was the case in Edesur, our distribution In order to pay its obligations, the Company depends in subsidiary in Argentina, between 2008 and January 2017, part on the cash received from dividends, loans, interest and currently with Codensa, our Colombian distribution payments, capital reductions and other payments from its subsidiary, whose tariff revision was scheduled for subsidiaries. The ability of subsidiaries to pay dividends, 2015 and was implemented in January 2018. Similarly, interest and credit payments, and deliver other distributions electricity regulation issued by government authorities in is subject to legal limitations, such as dividend restrictions, the countries where the Company operates may affect fiduciary duties, contractual restrictions that may be the ability of supplying companies to obtain revenues that imposed by local authorities. offset operational costs. The inability of any consolidated company from the Group access its subsidiaries’ cash flows at all times due to to obtain sufficient revenues to cover its operating costs certain government regulations, strategic and economic may affect the Company’s ability to operate as a start-up considerations, and credit restrictions. Historically, the Company has not always been able to firm and may otherwise have an adverse effect on the business, operational results and financial condition. Future operational results may continue to be subject Regulatory authorities may impose fines on the governmental regulations, economic conditions and credit Company’s subsidiaries due to operational failures or restrictions, therefore reducing the likelihood of being able non-compliance of regulations. to rely on cash flows of those entities’ operations for the to greater economic and political uncertainties, such as Company’s debt payment. 93 Risk FactorsLimits on dividends and other legal restrictions. Some of Enel Américas is currently involved in several litigations the subsidiaries are subject to legal reserve requirements that can conclude in unfavorable decisions of financial fines and other restrictions on dividends payment. Other legal for the Company. For example, in 2016 three claims against restrictions, such as currency controls, may limit the Celg (Enel Distribución Goiás) recall that the privatization ability of subsidiaries and associates to pay Enel Américas process was illegally executed and demands the nullity dividends, and amortize credits or the Company will of the process and also compensation. Plaintiffs include distribute other distributions. Furthermore, the ability of BNDES and the IFC. The main risk of this litigation is the any of the subsidiaries that are not wholly owned by Enel loss of concession of Enel Distribución Goiás from Enel Américas to deliver cash payments may be limited by the Brasil. As of the date of this Report, legal proceedings are fiduciary duties of the directors of such subsidiaries to pending. Therefore, there is neither an estimation of the minority shareholders. Moreover, some of the subsidiaries potential loss nor an associated provision. The resolution may be required by local authorities, in accordance with of cases can take up to ten years. Enel Distribución Goiás applicable regulations, to reduce or eliminate the payment is also involved in tax litigation for claims originated in a of dividends. As a result of such restrictions, any subsidiary period previous to its privatization, and this claim can not may, under certain circumstances, be prevented from only have an adverse effect in the Group, but also deplete delivering cash to Enel Américas. resources and attention for many years. Contractual Obligations. The restrictions for dividends Enel Américas might continue to be subject to future distribution include credit agreements that the subsidiary litigations that may have adverse substantial consequences Enel Generation Piura can prevent the payment of dividend for the business. and other distributions to shareholders if they are in non- compliance of certain financial ratios. In general, the credit The financial condition or operating results of Enel Américas agreements ban any type of distribution in the event of could be affected if it’s unsuccessful in the litigation defense non-compliance underway. or other lawsuits that are filed against the Company. For further information on litigations, see Note 34.3 of the Subsidiaries’ Operating Results. The subsidiaries and Notes of the Consolidated Financial Statements. associate companies capacity to pay dividends, credit amortizations or to deliver other distributions that Enel Environmental regulations in countries where the Américas is limited by its operational results. As long as Company operates and other factors can cause delays, the cash needs of any subsidiary overcome their available hinder the development of new projects, or increase cash flow, said subsidiary will not dispose of the cash to be the costs of operating and general capital expenditures. delivered to the Company. This is the situation that affected Enel Distribución Río and Enel Brasil as a consequence of Operating subsidiaries are subject to environmental the economic and political situation in Brazil. regulations, which, among other things, require the Additionally, the currency of any dividend paid by our future projects and obtain permits from regulatory entities, subsidiaries is subject to depreciation in comparison to our local and national. The approval of these environmental functional currency, which will have a negative impact on impact studies may take longer than planned, and also, can our capacity to pay dividends to shareholders. be retained by governmental authorities. Company to conduct environmental impact studies for Any situation described beforehand could adversely affect Those projects that require consultation of local interested the operational results and the financial condition. parties for its evaluation process can be rejected or its Enel Américas is involved in litigations, especially in of the company also can request precautionary measures development may be impeded or delayed. Stakeholders Brazil. 94 or other type that may negatively affect the Company if Annual Report Enel Américas 2017successful in their demands. Additionally, projects that The operations of existing thermal plants of Enel Américas don’t require consultation with local interested parties may can also affect the prestige facing stakeholders due be subject to intervention or suffer continuing resistance, to emissions such as particulate matter, sulfur dioxide delaying its approval process or development. and nitrogen oxides, which could adversely impact the In the case of the existing facilities, stronger regulations in environment. the four countries where the Company has investments, The reputation damages may place considerable pressure bear a significant risk of non-compliance so it has been on regulators, creditors, and other stakeholders, and lately, necessary to create teams specialized in compliance the fact that projects and operations are being carried out regulation and the maintenance of a closer technical is not optimal, creating a fall in share price, and hinder the relationship with the authorities in order to better capacity to attract or retain good employees, which results understand the possible implications. in the damaging of the Company’s reputation with these The delays or modifications of any proposed project, and stakeholders. the laws or rules that can change or be interpreted in a way Political developments or financial crisis or any other that can adversely affect the operations or plans for the crisis anywhere in the world may have a substantial companies in which the Company has investments, which impact in the countries where Enel Américas operates can adversely affect its business, operational results, and and therefore might negatively affect operations and the financial condition. liquidity. The four countries where the company operates are Power plants’ projects that can face a significant vulnerable to external impacts, including financial and opposition from different groups can delay progress, political events, which may cause important economic raise costs, hurt reputation, and potentially, result in problems and impact growth. If any of these economies image deterioration when facing stakeholders. would experience lower economic growth than expected or recession, it’s likely that clients would demand lower Reputation is fundamental to the relationship with the key electricity and some of them might face difficulties to pay stakeholders and other interested parties. If the Company the electricity bill, and probably the uncollectible accounts does not have the capacity to effectively manage, real of the Company would increase. Any of these situations problems or perceive those that can negatively affect may negatively affect operational results and financial opinions towards the Company, the business, operational situation. Any political scandal may indirectly affect the results, and financial conditions can be affected in an economy of the country. adverse way. Political or financial developments in other places in the Most of the countries have adopter rules for consultation world would also adversely affect the business of the with local stakeholders in the initial phase in order to company. For example, the presidential elections in the avoid any risk of conflict and to minimize the impacts United States in 2016 significantly increased the volatility in the power plants. The construction of power plants of global financial markets due to the uncertainty of political before the adoption of these rules that weren’t subject decisions. The new policies of the United States would to local consultation may face the opposition of diverse affect world markets and global commerce and could result interest groups, such as ethnic groups, environmentalists, in a renewed volatility, especially in commodities prices. landowners, farmers, local communities, and political Likewise, instability in the Middle East or in any other parties, among others. The management of these conflicts important fuel producer region, may also cause higher fuel may result in plant stoppages and legal costs. prices worldwide, which also would increase fuel costs 95 Risk Factorsfor thermal power plants and adversely affect operational to request for exemptions for repayment of some debt results and financial condition. Even in the case of a agreements or, to some extent, to request collaterals temporary shut-down of the United States government, or other emergency measures from Enel Américas as such as the one that took place in early 2008, or the threat shareholder, including extraordinary capital increases. of another one since February 8, 2018, may have a very adverse effect in time, execution and higher expenses The occurrence of future adverse events in these related to the main transactions and reorganizations economies may hinder the ability to carry out strategic involving ADS holders and the SEC in the United States. plans, which eventually would affect adversely operational results and financial condition. Moreover, an international financial crisis and its negative effect in the financial industry might have an adverse Moreover, in South America the financial and securities impact in the ability to obtain new banking financing in the markets are influenced in different degrees by economic historical terms and conditions. and market conditions of other countries, which may Political or financial developments of other kind may also decrease the capacity to access the capital markets in the The construction of power plants may suffer delays adversely affect the value of the company’s securities. countries where the company operates, as well as the and significant cost over-runs international capital markets for other liquidity sources, or raises of interest rates offered to the Company. In turn, Power plants projects can be delayed in obtaining regulatory reduced liquidity, may affect capital expenses, long-term approvals, or may face the shortage of equipment or investments and acquisitions, growth perspectives and workforce, and also can be subject to construction delays, dividends policy. strikes, adverse weather conditions, natural disasters, social conflicts, accidents or human errors. Economic fluctuations in South America may affect the operations and financial condition and the value of the Existing markets conditions in the initial phase of the securities of the company project’s approval might be totally different to the existing ones when the Project is completed, therefore in some All the operations of Enel Américas are located in the cases these projects could be commercially unfeasible. four countries of South America. Therefore, consolidated Such is the case of many existing projects of the Company, revenues may be affected by the performance of South which were initially planned under totally different market American economies as a whole. If local, regional or global conditions, when energy prices were high and competition economic trends adversely affect the economy in any of was lower. Currently the competition has increased due to the four countries where the company has investments the entrance of NCRE generation. If these assumptions are or operations, the financial condition and operational not taken into account, including the forecast of deadlines results may be negatively affected. The Company has and the estimation of expenses related to these projects, it investments in Brazil, a relatively volatile economy, which might result in cost overruns and execution periods greater has experienced political instability due to the scandals than estimations, which in turn could have a negative of corruption of 2015 and afterwards involved several effect for the business, operational results and financial government officials, including the president, whose situation. The adequate sites to develop new projects impeachment led to the forced termination of her term in are sometimes in greatly challenging areas in terms of 2016. geographical topography, and in some cases in mountain slopes or inside jungles with limited access. These factors Insufficient cash flows of subsidiaries located in countries also can provoke significant delays and excessive costs. with volatile economies have led, in some cases, to their inability to comply with financial obligations and the need It’s possible that the Company may not be able to make the appropriate acquisitions. 96 Annual Report Enel Américas 2017The Company constantly verifies acquisitions prospect Even though the functional currency is the US dollar, that can increase market coverage or complement existing the subsidiaries generate revenues in Argentine Pesos, businesses, although it cannot ensure that appropriate Nuevos Soles, Brazilian reais and Colombian pesos. procurement transactions can be identified and specified in the future. The acquisition and integration of independent In general, the Company significantly has been and companies that are not controlled by Enel Américas is continues to be exposed to the fluctuations of local generally a complex, time-consuming and expensive currencies with respect to the dollar. process. If an additional acquisition is made, such as the ones carried out in 2017 in Brazil, Enel Distribución Goias Due to this exposure, cash generated by the subsidiaries, (Celg) in February 2017 and Volta Grande in November expressed in dollars, may substantially decrease when 2017, it may be that there are significant debts incurred and local currencies are devalued with respect to the dollar. The liabilities assumed, the potential loss of key employees, future volatility in exchange rates in currencies in which depreciation expenses related to tangible assets and the the Company receives revenues or in which incurs costs, distraction of management from other business concerns. can affect the business, financial condition, and operating Additionally, any delay or difficulty related to the acquisition results, especially when expressed in US dollars. and integration of multiple transactions could have an adverse effect on the business, financial condition or its Long-term energy sales contracts are subject to operational results. fluctuations of the market price of certain commodities The business and profitability of Enel Américas may be and other factors. adversely affected if water rights are rejected or water Enel Américas is economically exposed to market price concessions are granted for a limited time. fluctuations of certain commodities due to long-term energy contracts. As selling counterparts, subsidiaries The Company owns water rights over river and lakes have material obligations due to the long-term energy located in the vicinity of its generation facilities, which contracts at a fixed payment. The prices of these contracts were granted by the authorities of the respective countries. are indexed at the value of different commodities, In Colombia, the water rights or water concessions are exchange rates, inflation, and the market electricity prices. granted for periods of 50 years and are renewable for the Adverse changes to these rates could reduce the fees that same period; however, these concessions can be revoked, a reasonably applied to the electricity sales contracts in the for example, when there is a progressive decrease or long term at a fixed price, which could adversely affect the depletion of the waters. In Colombia, the access to water operational results and financial condition. for human consumption is the first priority before any other use. In Peru, water concessions are granted for indefinite In the countries, where clients can freely choose non- periods, and can be revoked due to scarcity or a decline in regulated tariffs, including Peru, this choice may be service quality. harmful for operating revenues that the Company would have received in a regulated regime. In some cases, clients Any limitation to current water rights, the need to obtain may choose an alternative supplier of energy, which would additional water rights, or the current unlimited water negatively affect the business, operational results and concessions could have a material adverse effect over the financial situation. hydroelectric development projects and profitability. Exchange risks could adversely affect the results and influence over Enel Américas and may have a different the value in dollars of the dividends paid to the ADS strategic vision than the minority shareholders when it holders. comes to the development of the Company. The controlling shareholder could have substantial 97 Risk FactorsAs of December 31, 2017, Enel Spa (Enel) owns 51.8% of The Company is subject to financing risks, such as the share capital of Enel Américas. Enel, the controlling those related with the financing of new projects and shareholder, can determine the results of almost every capital expenditures, and the risks related to the important issue that requires a shareholder vote, as is the refinancing the maturing debt; it’s also subject to the appointment of the majority of members in the Committee compliance with debt obligations, all of which could and, subject to legal and contract restrictions, the dividend adversely affect liquidity. policy. Enel can also exert influence over the operations and strategy of the business. Its interests may, in some As of December 31, 2017, the Company’s consolidated cases, differ from the minority shareholders interest. For debt amounted to US$ 5,004 million. example, Enel carries out its commercial operations in a field of renewable energy in South America through the The maturity profile of consolidated financial debt is the company Enel Green Power S.p.a., in which the company following: has no capital interest. Any present or future conflict of interest that may affect Enel could be solved against Enel • US$ 671 million in 2018; Américas interests, for these materials. Therefore, growth • US$ 1,742 million from 2019 to 2020; may be potentially limited and the business and operating • US$ 986 million from 2021 to 2022; and results may be seen affected adversely. • US$ 1,605 million onwards. The electricity business is exposed to risks arising from Below is a breakdown of the debt maturity in 2018 by natural disasters, catastrophic accidents, and acts of country: terrorism, which could adversely affect the operations, • US$ 289 billion for Brazil; revenues and cash flows. • US$ 266 million for Colombia; • US$ 102 million for Peru; The Company’s main facilities include power plants, • US$ 11 million for Chile; and transmission and distribution assets. Earthquakes, floods • US$ 3 million for Argentina. or fires may damage the Company’s facilities, and other catastrophic disasters caused by nature or by human Some of the debt contracts are subject to: (1) financial action, as well as acts of terrorism, vandalism, and riots. covenants, (2) affirmate and negative covenants, (3) events A catastrophic event could lead to business disruption, of default, (4) mandatory prepayment events for breach of resulting in significant reductions in revenues due to lower contractual conditions, and (5) certain clauses for change of demand or significant additional costs not covered by control by significant mergers or divestments, among other insurance terminations for business interruptions. There provisions. A significant portion of the Company’s financial may be delays between the occurrence of a significant debt is subject to cross-default clauses that have varying accident or a catastrophic event and the definitive definitions, criteria, materiality thresholds, and applicability reimbursement of Enel Américas insurance policies, which in the subsidiaries in which such cross-breach would arise. normally contemplate a deductible and are subject to maximum amounts per claim. In the event that Enel Américas or its significant subsidiaries breach any of these material contractual provisions, For example, in March 2017, “El Niño Costero” phenomenon debtholders may demand immediate repayment, and a in Peru caused unusually heavy rains that caused the significant portion the debt may be due and payable. For temporary stoppage of several hydroelectric power plants example, a result of the economic and political situation due to the overflowing of rivers, such as Callahuanca (81 in Brazil, Enel Distribución Río has been facing financial MW) and Moyopampa (69 MW). Five power plants ceased problems which has led to a lower demand for electricity, temporarily operations on March 16, 2017, and one of them higher costs due to inflation and a deterioration of cash is still out of service. flows and EBITDA. Enel Distribución Río had to renegotiate 98 Annual Report Enel Américas 2017some of its financial covenants between December 2015 that are not related and are operated independently. and January 2016, in order to avoid a breach of contract. This dependency exposes the Company to severe risks. There is an additional risk of covenant non-compliance if the If the transmission is interrupted or the transmission economic environment in Brazil continues to deteriorate. In capacity is inadequate, it can impede a sale and delivery March 2016, as a result of the credit deterioration of Enel of electricity. If the energy transmission infrastructure in a Distribución Río, had to guarantee a 3-year bank loan from region is inadequate, the recovery of costs and profits can Enel Distribución Río for US$ 75 million. Later, in July be insufficient. If restrictive price regulatory transmission 2016, we granted intercompany loans to Enel Brasil for its norms are imposed, the transmission companies that the financial stability. entity supports may not have enough incentives to invest in the infrastructure expansions in transmission, which It’s possible that the Company would not be able to could adversely affect operations and financial results. achieve debt refinancing or obtain such refinancing in The construction of new transmission lines may take terms that are acceptable to the company. In the absence longer time than in the past, mainly due to new social of such a refinancing, Enel Américas could be forced to and environmental demands that are creating uncertainty dispose of assets in order to make overdue payments about the possibility of completing the projects. Also, of its indebtedness under circumstances that could the increase in new NRCE projects congests the current be unfavorable to obtain the best price for such assets. transmission system, since these are projects of fast Moreover, it’s possible that the assets could not be sold construction, while the new transmission processes can fast enough or at high enough amounts to enable such take longer to be constructed. payments to be made. The Company also depends on gas pipelines to obtain Another scenario is that Company may not have the capacity natural gas, mainly in Peru, country whose most of to obtain the required financing to complete the projects the installed capacity is thermal. The Peruvian system under development or under construction. Existing market faced congestions of gas and energy due to the lack of conditions when requiring the funds or other unplanned installed capacity of gas pipelines and transmission cost over-runs may compromise the ability to finance these lines, respectively, resulting in higher spot prices. From projects and investments. 2008 to October 1, 2017 there was a spot prices limit, but restrictions to transmission lines and gas pipelines As of the date of this report, the Company considers that pressured Peruvian authorities to enforce a special model Brazil is the country with the highest refinancing risk. As for spot prices calculation. The maximum price was of December 31, 2017, the third-party debt of the Brazilian US$95 per MWh. Even though the maximum price was subsidiaries of Enel Americas amounted to Ch$ 1,715 originally established due to the gas pipeline restrictions, million. The incapacity to finance new projects or capital the lack of transmission capacity, mainly in the south of expenditures or to refinance the Company’s existing debt Peru, expanded the use the maximum price determination could adversely affect operating results and its financial model. During the first half of October 2017, in the absence condition. of a maximum spot price and due to the delay in the commissioning of the new transmission line, spot prices Enel Américas trusts in the electricity transmission were unusually high in the south of Peru (the maximum facilities that are not their property neither in their price was US$180 per MWh and simultaneously, very low control. If these facilities do not provide a proper in the central area of the country. It wasn’t possible to transmission service, it can impede the energy delivery dispatch excess energy of the central region to the south sold to final clients. of Peru). Similar situations might happen in the future, and also in other countries where the company operates, and In order to deliver the electricity sold, the Company depends thus impact operational results. on the transmission system property of other companies 99 Risk FactorsAny interruption, failure or lack of transmission facilities The business can experience adverse consequences may discontinue the business or affect market prices, if it does not have the ability to reach satisfactory which can in turn adversely affect operational results and agreements in the collective negotiation contracts financial condition. with the unionized workers and retain key employees. Thermoelectric generation facilities in the four countries A large percentage of the employees are members of a where the Company operates purchase gas, coal, diesel union that has collective negotiation contracts that need and other fuels to generate electricity, depending on the to be regularly renewed. The business, financial condition, technology of the respective power plants. Any contractual and operational results of Enel Américas could be adversely breach or supply shortage may prevent the facilities from affected in the case that an agreement cannot be found producing electricity in a timely manner. with any of the unions that the employees represent, or by an agreement with the trade union that contains conditions For example, our subsidiary Fortaleza owns and operates that Enel Américas finds unfavorable. The laws in the a gross 327 MW natural gas combined cycle power plant, various countries where the Company operates establish whose capacity supplies one third of the power demand of legal mechanisms for the judicial authorities to impose 8.8 million people in the State of Ceará in Brazil. In order work contracts if the parts are not capable of reaching to generate electricity and fulfill its energy commitments, an agreement, which can increase costs from what was Fortaleza maintains a contract with Petrobras, the Brazilian budgeted. company appointed by the federal government to supply natural gas in accordance with the Thermoelectric Priority Additionally, some employees have highly specialized Program (“PPT”, in its Brazilian acronym) created in 2000. abilities and certain actions such as strikes, walk-outs or In accordance with the terms of the PPT, the gas supply work stoppages by those employees could adversely to Fortaleza would be guaranteed for 20 years from 2003, impact the business performance, operational result, and at a price defined contractually. The main purpose of the financial, as well as the Company’s reputation. contract is to avoid a short-term energy crisis ensuring thermoelectric generation due to the vulnerable situation The relative lack of liquidity and volatility in the of hydroelectric facilities exposed to weather conditions. Chilean securities market and its dependence on the In September 2017, after 15 years of delivering supply, economical conditions in Latin America and other Petrobras informed Fortaleza its intention to terminate parts of the world, could negatively affect stock prices the contract based on the existing inequality between the and the company’s ADS. contractual price and the current market conditions. In December 2017, date on which the gas supply should be Even though the Company does not own assets in Chile, discontinued, the court issued a legal order guaranteeing its stocks are listed in the Chilean Stock Market, for which the natural gas supply to Fortaleza from Petrobras. Enel Américas is regulated under the laws of the Republic Nevertheless, in February 2018, the court cancelled the of Chile, as well as being placed in Chile. The Chilean stock order and Petrobras notified Fortaleza that the gas supply markets are substantially smaller and less liquid that the will be suspended. main stock markets in the United States. Additionally, the Chilean stock markets can be affected in an important The risk of stoppage of a thermal plant would also affect measure by events in other emerging markets. The low the operations of Enel Distribución Ceará because the of liquidity in the Chilean market can damage the holder’s latter contracted 100% of the generation of Fortaleza until ADS to sell ordinary retired stocks in the Chilean market of 2023, year where the concession Fortaleza finishes. This the ADS program, in quantity, price, and moment in which situation might negatively affect the Brazilian business, they would like to. At the same time, liquidity and the stock operational results and financial situation, as well as the market or ADSs can be affected by a series of factors consolidated financial situation due to the risk of default that include variations in exchange and interest rates, and of financial agreements and other contracts of most of deterioration and volatility of the markets and any liquidity the Brazilian subsidiaries, and also the reputation of the change, financial condition, results, and the company’s company. 100 profitability. Annual Report Enel Américas 2017 Also, the Chilean stock market can be affected in various operate its business, the failure of which could adversely degrees by economic conditions and the other markets in affect the condition of the business, financial and Latin America, in emerging markets and other parts of the operational results. world. Although the economic conditions in these countries can significantly differ from the economic conditions in IT systems are vital worldwide, and electricity sector is not Chile, the investor’s reactions to changes in the economies an exception. In the generation business, IT systems can of any other country may have an adverse effect on the monitor the operations of power plants, maintain power market value and value liquidity for Chilean issuers. A raise generation and network performance, adequately generate in the perceived risk of the investment in Latin American customer invoices, achieve operational efficiency, and countries and other parts of the world may reduce the meet service goals and standards. Distribution subsidiaries capital flows to Chile and negatively affect the Chilean could also be adversely affected as they rely heavily on economy in general, and the shares or ADS in particular. IT systems to monitor their networks (currently known Lawsuits filed against Enel Américas in the other digitalization of the market), billing processes for millions of countries of South America or the claims against the customers, and customer service platforms. In Colombia Company that are based on foreign legal concepts may and to a lesser extent, in Argentina, the Company has in some countries as smart grids because of the greater not be successful. installed smart meters that will enable bidirectional, digitized and interconnected bidirectional communication. All of the Company’s assets are located outside of the Temporary or long-lasting operational failures of any of United States. All the directors and all senior executives these IT systems, even if intended or not, may have an are domiciled outside the United States and most of their important adverse effect in operational results. assets are also located outside the United States. If any investor were to file a lawsuit in the United States against Additionally, cyber attacks may have an adverse effect for the Company directors, senior executives or experts, it the reputation of the Company and its relationship with the may be difficult for them to pursue a legal process within community. In the last years, global cyber attacks have the United States against such persons and may be difficult intensified worldwide threatening the security systems, for them to enforce, in the courts of the United States or treasury operations and IT systems. There is a large Chile, a judgment rendered in the United States based exposure to cyber attacks whose objective is to damage on the civil liability provisions of the United States federal assets through computer networks, cyber espionage in securities laws. In addition, there are doubts as to whether the pursuit of strategic information that may be beneficial a successful action could be waived in Chile with regard to to third parties, and cyber theft of private and confidential the liability based solely under the guidance of the United information, including information of the company’s States federal securities laws. customers. There has been great exposure to cyber attacks Interruption or failure of the information technology affect the access to the service from users and attacks that systems and communications systems or external could affect the domain name systems, restraining the use attacks or breaches of these systems could have an of certain web pages and useful applications. in the past, including attacks of service rejection that might adverse effect on operations and results. The Company relies on information technology, cyber attacks may occur and may adversely affect the communication and process systems (“IT systems”) to Company in the future. Enel Américas has suffered cyber attacks in the past. New 101 Risk Factors15Regulatory Framework of the Electricity Industry 102 Annual Report Enel Américas 2017103 Letter from the ChairmanDescription of the Industry Sector Enel Américas and its subsidiaries and jointly controlled companies participate in the generation, transportation, distribution and sale of electricity in four countries, each of which has a regulatory framework, energy matrixes, participating companies, and different growth and consumption patterns. The following is a brief summary of the main legal bodies that regulate the activity, the market structure and the most relevant aspects regarding the agents of each of the countries where the Company operates. Argentina The Argentine electricity sector is governed by, among other regulations, by Law N°15,336 of 1990 and Law N°24,065 of 1992. The Wholesale Electricity Market (MEM) there are four local agent categories (generators, transmission companies, distributors and large clients) and foreign agents (generation trading companies and demand trading companies), companies that are authorized to buy and sell electricity and its related products. Originally the generation sector was organized on a competitive base (marginalism), with independent generators that sold their energy in the MEM spot market or through private contracts, to clients in the MEM contracts market, or to the “Administrative Companies in the Wholesale Electricity Market S.A.” (CAMMESA) through special transactions such as contracts under the Resolution S.E. 104 Nº220/2007 and Resolution S.E. Nº724/2008. Nevertheless, this regimen changed substantially in March 2013, when the Energy Secretary approved Resolution S.E Nº 95/2013, which established a remuneration system for the generation based on average costs, forcing the delivery all the energy generated to CAMMESA. This new compensation scheme became valid in February of 2013 and was updated through the Resolution SE N° 529, N° 482, N° 22 in 2014, 2015, and 2016 respectively. On February 2, 2017 the Energy Secretary published the Resolution SEE N°19/2017 replacing Resolution SEE N° 22/2016 and establishes new guidelines for the remuneration of existing generation power plants, focusing on the power availability of the units. The transmission industry operates in conditions of monopoly, and is composed by several companies to which the Federal Government grants concessions. Annual Report Enel Américas 2017 The distribution sector operates under monopoly On December 16, 2015, through Decree 134/2015 a conditions and is served by companies that have also been national energy emergency was declared until December granted concessions. Distribution companies have the 31, 2017, where the Ministry of Energy was instructed to exclusive responsibility that electricity has to be available elaborate and apply actions to the Generation, Distribution for final clients within a specific concession area, and does and Transmission industries with the objective of adapting not consider if the client has a contract neither with the the service quality and supply security; and teaching the distributor nor with a generator. National Public Administration how to carry out consumer rationalization programs in the respective public bodies. Due to the economic slow down that affected the country in 2002, Law Nº25,561 was enacted with emergency. The Law disrupted the American dollar parity and pushed the conversion from Argentine pesos from obligations and rights assumed by the American currency. This forced Regulation of Generation Companies nominal conversion from dollars to pesos and had a The regulation of generation companies has suffered strong impact in the whole Argentinian electricity industry. important variations since the enactment of Law N°24,065 Additionally, the Government approved several regulatory until Resolution S.E.E Nº 22/2017. In accordance with the measures that slowly intervened in the development aforementioned Law, every generation agents from MEM of the industry. The Emergency Law has been subject must be connected with SIN (National Interconnected to successive extensions and with regards to the last System) and are obligated to comply with the dispatch one, approved through Law N°26,896, will be valid until order to generate and deliver electricity, in order to sell December 31, 2015. The pesification and devaluation in the spot market and in the forward market (MAT). The of the economy forced the renegotiation of all of the distribution companies, trading companies and large clients concession contracts. In particular, the distribution sector subscribed the private supply contracts with generating and the company participated in the “Energy Distributing companies, paying the contractual price directly to the Companies from the South, S.A.” (Edesur), and in 2006 with generator, and in addition paying a fee to the transmission the Government when an Act Agreement of Contractual and distribution company for the use of their systems. Renegotiation was signed, that subsequently was ratified through Decree PEN N° 1959/2006, which gradually has With the objective of stabilizing generation prices facing allowed the adaptation of tariff revenues as a way to tariffs for clients, the market defined a seasonal price guarantee the business sustainability. The implementation being the price of the energy that distributors pay for of this agreement was paralyzed since 2008 and until this their energy purchases traded in the spot market. This exercise, as explained below. price is determined every six months by the Energy No generator, distributor, large user, nor any other company Secretary, after CAMMESA had carried out their spot price controlled by any of the latter or under its own control, can projections in a determined period. In order to adjust to be the owner or majority shareholder of a transportation the differences between this price and the real cost of the company or its controlling companies. At the same time, original generating, the establishing fund was created. If transmission companies are forbidden to enter into the seasonal price is lower than the cost of generating it, generation activities, distributing, buying, and/or selling it has to be removed from the fund to compensate the electricity. The distribution companies are not allowed to generation; otherwise it contributes to the fund. Since own generation units. 2002, the Energy Secretary in practice has maintained the average stationary price, without important variations. This Regulated clients are supplied by distribution companies has created an important deficit in the stabilization fund, with regards to regulated fees, unless they have a which has been covered by the Argentine state through minimum demand capacity of 30kW. In this case, they are subsidies increasingly larger. considered as “large clients” and can freely negotiate their prices with generation companies. The approved resolutions created from the emergency Law had a significant impact in energy prices. Between the 105 Regulatory Framework of the Electricity Industrymeasures carried out it mainly highlights the Resolution SE purpose was to optimize reliability and availability of the 240/2003, which modified the way to fix spot prices when equipment, for a total amount of US$304 million, in a 7-year separating the calculation of marginal operating costs. The term. The agreement also contemplates the payment of main objective of Resolution SE Nº 240/2003 is to avoid the contract maintenance obligations (Long Term Service price indexation linked to the dollar, and despite that the Agreement -LTSA-) of the combined cycle power plants. generation study is still based on the real fuels used, the spot price calculation is based on absolute gas availability Subsequently, Resolution S.E. N° 95/2013 abandoned to satisfy demand, even in circumstances in which many the marginalizing pricing system, thus entering into a generators generate with alternative fuels, such as diesel, recognition mechanism of average costs. The Resolution due to the difficulty of supplying natural gas. The value of recognizes fixed costs remuneration, variable costs and water is not considered if its opportunity cost is higher than additional remuneration. Fixed costs are remunerated the generation cost using natural gas. The Resolution also (in ARS$/MW-hrp) in function to technology, scale, and establishes the spot price limit is Ar$120/MWh, which is available power. It’s also subject to the achievement of still valid. The real variable costs of thermal units that burn goals related to the availability established. In terms of liquid fuels are paid by CAMMESA through the mechanism variable costs, the operational costs are remunerated and denominated Transitory Dispatch Cost Over-run (TDO). maintenance in function to the energy generated (in ARS$/ MWh), according to the fuel utilized, and its technology (the Also, based on the dispositions included in the Emergency generators do not have fuel costs since this is provided Law, the payment for capacities is reduced from US$ 10 by CAMMESA). Lastly, the additional remunerations are to AR$10 per MW-hrp (hrp: remunerated capacity hours). calculated in function of the total energy generated (in Subsequently, the capacity warranty is slightly raised to ARS$/MWh), considering the technology and generator AR$ 12, approximately ⅓ of the value paid before the 2002 scale. Part of these remunerations is accumulated in the crisis. fund that will be used to finance the new investments in infrastructure in the electricity sector. On December 2004, the Energy Secretary approved the Adherence Act through the Resolution 1427/2004, for the The Resolution rules generators, cogenerators and auto Rehabilitation of Wholesale Electricity Market. The majority generators, except the power plants that started operations of the generators signed the Act, including the generation as of 2005, the nuclear power plants, and the generation companies owned by Enel Américas (former Enersis). of hydroelectric national power plants; reserves and With regards to this Resolution, the Secretary created centralizes in CAMMESA the commercial management a fiduciary fund, named FONINVEMEM, where private and the dispatch of fuel and suspends the celebration of generators provided part of the energy sold during 2004 bilateral energy contracts between generators and MEM to 2007 for the construction of two new combined cycles. agents, and the latter should acquire electricity energy Also in this new capacity, in 2010 the generation companies demand with CAMMESA. Resolution SE N° 529/2014 owned by Enel Américas (former Enersis), along with other mainly performs the value actualization for Resolution SE companies, participated in the creation of another trust N°95 and incorporates the non-recurring maintenance for the construction of another combined cycle, expecting remunerations for thermal power plants. the closing of a combined cycle for October 2016. There was part of the energy credits for to the energy sold in the Resolution SE N°482 of 2015 updated the remunerations period 20018 to 2011 allocated to this new project. of generation companies in force since February 2014. Pursuant to Resolution 529/2014, thus creating a new In 2012, the framework of the agreement achieved with the position, with the objective of financing investments that Government to enable the development of our subsidiaries have not been used and excludes hydroelectric power in Argentina, on October 12, Costanera subscribed an plant from the variable payments for energy transport agreement for the implementation of an investment plan and determined the remunerations for wind energy for the generation units in Costanera power plant, whose power plants, photovoltaic solar energy, biomass/ biogas 106 Annual Report Enel Américas 2017and internal engine combustion. On March 30, 2016, the CAPACITY REMUNERATIONS FOR THERMAL POWER PLANTS Secretary of Electric Energy, depending on the Ministry Minimum Price (since February 2017) of Energy and Mining, through the Resolution N°22/2016, Large Cycles updated all of the remuneration values of Resolution SE Large TV N°482/2015, replaced Annexes I, II, III, IV. V, VI, and VII of the aforementioned Resolution. Large TG Engines: 3,050 US$/MW-month 4,350 US$/MW-month 3,550 US$/MW-month 5,700 US$/MW-month Resolution SEE N°19/2017, was enacted on February 1, 2017, defines a minimum remuneration for capacity and scale, additionally for the thermal units establishes the possibility of offering the availability of with a same Base Price for Committed Remunerations May 17-Oct 17 Nov 17 onwards: 6,000 US$/MW-month 7,000 US$/MW-month Additional Price for Committed Remuneration (Maximum) differential remuneration for every thermal technologies. The thermal generator may declare every summer the value May 17-Oct 17 Nov 17 onwards 1,000 US$/MW-month 2,000 US$/MW-month of the firm capacity to commit for each unit during a 3-year period, being able to discriminate between summer and winter periods (adjusts can be made in the same period). As the exception and for the year 2017, the declaration of Commitment of Guaranteed Availability is habilitated, along with the information required by the Seasonal Winter Program, in force from May 1 to October 31, 2017. The maximum price given the offers that should be awarded by CAMMESA, with regards to the needs defined for the system to face critical situations. CAPACITY REMUNERATIONS FOR HYDROELECTRIC POWER PLANTS Minimum Price (since February 2017) The thermal generator will sign a Commitment of Chocón Guaranteed Availability contract with CAMMESA, but Arroyito will give to the corresponding demand as determined by Secretary of Electric Energy. The remunerations that the unit will receive with the capacity commitment will be proportional to its performance, and the minimum value will be calculated in relation to the minimum price. Additional Price May 17-Oct 17 Nov 17 onwards: 2,000 US$/MW-month 3,000 US$/MW-month 500 US$/MW-month 1,000 US$/MW-month With respect to the hydroelectric power plants, a new will be subject to the disposal of large events insurance scheme to evaluate capacity was defined, based on the (turbines, etc.) and the progressive modernization of Since November 2017, 50% of the additional remuneration real capacity available (implying a greater value of capacity control systems. with respect to the previous regulation). Likewise, they introduce a base capacity value, and another additional REMUNERATION BY ENERGY discriminated from May to October 2017, and starting in November 2017. The Resolution establishes the following remuneration values, which are defined in dollars (conversion considers the exchange rate published by the Central Bank of the Republic of Argentina of the last business day) and the maturity dates are established by CAMMESA’s Procedures: Energy Generated Cycles and TV Gas Liquid Engines Gas Liquid Hydroelectric 5 US$/MWh 8 US$/MWh 7 US$/MWh 10 US$/MWh 3.5 US$/MWh Energy Operated (associated to Rotant Capacity) Thermal Hydro 2.0 US$/MWh 1.4 US$/MWh Energy values are defined at the Node. 107 Regulatory Framework of the Electricity Industry For the cases in which generators have requested a loan for partially and temporarily increased, the Integral Tariff maintenance, US$1/ MWh will be discounted for energy Review (RTI) were distribution companies pending under generated by the power plant until paying the balance for national jurisdiction. This tariff revision process wasn’t financing. accomplished, and the term for contracts renegotiation was postponed several times through laws enacted by Later the SEE established that the conversion to pesos Congress, thus postponed the duration of the Economic would be carried out the day previous to the maturity date Emergency. since November 2017. The new National Administration made a change of The Resolution SEE N° 1085/17 modifies since December paradigm on December 16, 2015, when the National 1, 2017, the agents’ payment method for the transportation Executive Power issued the Decree N° 134/2015 declaring system (the remuneration for the transport agent doesn’t the emergency for the National Electricity Sector until change because it was determined in its respective RTI). It December 31, 2017. Also mandated the recently created established the following: Ministry of Energy and Mining to develop, release and > The costs associated to transportation remuneration will energy generation, transport and distribution sectors. The be distributed proportionately in relation to demand. purpose of these measures was to adjust the quality and > Generation Agents will pay direct connection costs only. safety of electricity supply and ensure the energy utilities > Mandates CAMMESA to propose the modifications services in suitable technical and economic conditions. implement the national program of activities needed for the required for the proceedings within 90 days (regulation of the MEM). Regulation of distribution companies In January 28, 2016, after the seasonal price changes, the Emergency Resolution No. 7/2016 was issued by the Ministry of Energy and Mining. The resolution introduced by the ENRE to adjust Edenor and Edesur fees through a transitory tariff until the RTI is applied, expected for December 31, 2016. Also, Resolution No. 7/2016 Companies that obtain concessions carry out the suspended the PUREE and required the application of a distribution activity. Distribution companies must supply subsidy rate for the more vulnerable clients. all of the electricity demands in their concession areas exclusive to prices (tariffs) and conditions established In January 29, 2016, the ENRE issued Resolution No. in the Regulation. The concession agreements include 1/2016 with a new transitory tariff valid from February 1, penalties for the failure to provide electricity service. The 2016. Its application is included in Resolution MEM No. concessions were given for distribution sales and retail 7/2016, which changed the supply procedures and defined sales. The concession periods are divided in “management a monthly Billing. periods” that allow concessions abandon the concession every certain amount of time. Also, the ENRE issued Resolution No 2/2016, which ended the FOCEDE and established a new procedure for funds Since 2011, there are two electricity distribution areas from Resolution ENRE 347/12, in substitution for Edesur subject to federal concessions. These concessionaires and Edenor confidence for a commercial account. are Edesur and Edenor, both located in the city of Buenos Aires and Gran Buenos Aires. Until 2011 Edelap was also On April 5, 2016, Resolutions N° 54 and 55 were enacted under federal jurisdiction. by the National Electricity Regulating Entity. The first Most of the distribution companies renegotiated their for the hiring of a Consultant for the RTI of EDESUR and contracts during 2005 and 2006, although fees were EDENOR, and the second approves the timetable and approves the Bases and Conditions for Private Companies, issues guidelines for the same, indicating that ENRE defines the Parameters of Quality and the Rate. 108 Annual Report Enel Américas 2017Continuing with the tariff renegotiation process, on August as timely and convenient to instruct ENRE to limit the 8 ENRE issued Resolution 463/16, which provide details VAD increases that emerged as an RTI process results of the parameters of the technical service and quality, and to be applied starting February 1, 2017, to a maximum of the cost and values of unsupplied energy required for the 42% with respect to the valid VAD at that date, having to modification of the RTI. Similarly, on August 29 through complete the resulting value application of the new VAD, in Resolution ENRE 492/16, the Quality of Commercial two stages: the first in November 2017, and the second in Service and Technical Product Parameters were defined. February 2018. This resolution contains economic signals towards the fulfillment of deadlines and times of supply replenishment Also, it was decided that ENRE must recognize Edenor reductions. S.A. and Edesur S.A. the VAD difference that is produced by the application of gradual fee increases recognized by On the other hand, on August 30, the regulation entity RTI, in 48 (forty-eight) installments starting from February proceeded to inform the value of the Rate of Profitability. 1°, 2018, which increases the resulting VAD value as of that This was established on Resolution ENRE 494/16 at date. 12.46% before taxes and 8.1% after taxes. The regulation also sets revenues updates mechanism for On September 1, Edesur proceeded to the final presentation the distribution companies as a result of price variations in of the investment plan requested by Resolution ENRE the economy and all of the other issued related with the 55/16 and then receiving from the Secretary of Electric quality of the service delivered and supply regulation. Energy the note NO-2016-01193698-APN-EDESUR RTI which established that credit and debit from the disregard Once this regulatory framework is established with of the Agreement Act would be treated separately from regards to the distribution tariffs regime including the the income required from the RTI and proceeded to instructions enacted by Ministry of Energy and Mining, and complete on September 6, the related reports with the resolutions contained in Resolution SEE N° 20/2017 on Fundamentals and the criteria of the proposal: exploitation seasonal prices valid from the corresponding invoice of costs, revenues requires and calculation of fees, tariff February 1, 2017, it was declared that the transition tariff structure and wholesale transfer costs, and the updating phase of Edesur was met, and the Agreement Act that the mechanisms of the Company’s distribution costs, results company adheres as established in its concession contract. and economic financial model. This method concluded with the delivery of formal final reports required for the In accordance with the request made by Article N° 29 aforementioned resolution. of Resolution ENRE N° 64/17 (Physical monitoring of the On September 28, through Resolution ENRE 0522/2016, Investments Plan duly informed for the RTI (in physical works plan) on March 20 Edesur sent a note ratifying the the regulating organism decided to call for a Public Hearing terms). with the objective of acknowledging and listening to opinions with regards to Tariff Proposals presented by In conformity with the Law of Administrative Procedures, the distributing companies for the next five-year period; on March 20, 2017 Edesur S.A. formally filed an appeal to this is part of the Integral Tariff Revision Process (RTI) the ENRE questioning resolution ENRE N° 64/17 which and with previous character to define the tariffs to apply basically focuses on the treatment of easements, some by the referred Subsidiaries in said five year period. optimization criteria in the definition of the capital base, On Wednesday February 1, 2017, the ENRE published the treatment for the recognition of certain taxes and Resolution N° 0064 which closed the RTI process and as a objections to the quality regime. We highlight the fact that result, establishes the annual remuneration recognized by the observations and the explanatory orders presented, Edesur S.A. amounting to ARS$14,539,836,941. either accepted or rejected by the regulator, will not significantly affect the result of the RTI. With regards to the application of new structures and tariff charges, the Ministry of Energy and Mining considered 109 Regulatory Framework of the Electricity IndustryOn July 26, 2017 ENRE issued Resolution N° 329/2017, In an unprecedented fact performed on October 27, 2017, defining the procedure for the billing of deferred revenue the ENRE, complying with resolution N° 403 of October 26, established by Resolution ENRE N° 64/2017 (Article 4°) 2017, the Ministry of Energy and Mining, through resolutions states that “…receivables corresponding to each tariff 526 and 527 convened a Public Hearing for November 17, category, will be the sum of the monthly accrued revenues, 2017 in the Palace of Waters. The topics to be discussed are recognized by tariff category …”; establishing the certainty in the first place the new reference prices for capacity and of payment by recalculating each year the revenues not energy, and the reference prices for capacity and stabilized recovered deducting the payments from initial credits, for energy reference for distribution companies at node, and recalculating the remaining installments to cover the equivalent to each of them and for the seasonal period balance; and the mechanism to update the latter “…These of summer 2017-2018; the energy savings stimulus plan; charges will be adjusted, being components of the CPD, social tariff and the distribution methodology between the according to the “trigger clause” and in the “Adjustment demand of MEM and the cost of remuneration of energy Mechanism” …”. transport in extra high tension and between the demand of a region and the corresponding demand for transport On May 17, 2017 Law 27,351 of Electro dependents for mainline distribution. And in the second place, informs was enacted, establishing the gratuity and continuity of the impact that would have the measures to be carried out electricity supply, together with the priority of service by the Ministry of Energy and Mining in the bills of users to those clients that for health reasons require constant of distribution companies, as a result of the Public Hearing electricity supply and with adequate tension levels in order that this Ministry has convened for Resolution MEyM to feed the equipment prescribed by a licensed physician 403/2017. This is in relation to the Wholesale Electricity and needed to avoid health or life risks. In this context, Market, the withdrawal of subsidies for energy transport on July 26, 2017 through Resolution ENRE 292, this entity and the criteria of distribution among users of transport of established the gratuity of service and the connection cost the transporters remuneration that this entity solved with for this users category of the companies Edenor y Edesur. the Integral Tariff Review of Transport of Electrical Energy. In this line, On September 25, the Ministry of Health through Resolution 1538-E created the “Registry of Electro As a result of this, on December 1 through Resolution dependents due to Health Reasons”. To this date, are still 602, ENRE approved the new values of Distribution Own pending the rules for operational issues to ensure the Cost of Edesur, through the application of the mechanisms continuity of supply, for the compensation of distribution considered in the RTI. Concurrently, issued the tariff companies (Law 27,351 Article 11.- The Executive Power scheme that reflects seasonal prices (generation and will appoint the authority to enact this law and will assign transport) included in the resolution of the Secretary of the budget allocations needed to fulfill their objectives) and Electric Energy 1091 of 2017. It also approved the new the limits of responsibility of each of the parties involved. schemes for subsidy for Social Tariff and the bonus system for consumption savings for residential users. On November 1, 2017, ENRE enacted Resolution 525 partially establishing the Reconsideration Resource Finally, the return to normal conditions in relation to the interposed by EDESUR against Resolution ENRE 64/2017, economic emergency situations and energy emergency accepting its measures regarding easements treatments was materialized through the decision of the Argentinean and requesting the company that within 60 days should National Government of not to extend the effect of the submit an annual plan for the regularization of easements to Electric Emergency Law (in effect until December 31, be developed in the period 2017/2021. Also requested the 2017) and the Economic Emergency Law (in effect until recognition of expenses of CAMMESA, rates and others January 6, 2018). that should be available in future adjustments and minor modifications to the quality regime and other recognitions. 110 Annual Report Enel Américas 2017Regulation of Transmission Transmission was designed on the basis of general conception and the principles established by Law 24,065, adapting the activities to the general criteria contained in the concession given by Transener S.A., in Decree 2,473/92. For technological reasons the transmission business is related to economies of scale that do not allow competition, therefore it is a monopoly and is subject to considerable regulation. Similarly as the distribution industry, during 2016 ENRE carried out Integral Tariff Review for national transport companies (Transener S.A., Distrocuyo S.A., Transco S.A., the Province Energy Entity of Neuquén, Transba S.A., Transnea S.A., Transnoa S.A., Transpa S.A.) for the period 2017 and December 31, 2021, which came into force during 2017. Environmental Regulation compliance of these requirements forces the government to establish penalties, such as suspension of operations that, in the case of public service, can result in the cancellation of concessions. Law Nº26,190, enacted in 2007, defined the use of renewable sources for the generation of electricity as national interest and set as a goal 8% of the market participation for renewable energy in 10-year term. On October 21, 2015, the Official Bulletin published the new Law 27,191, of Renewable Energy in Argentina, modifying the Law N°26,190. The new regulation postpones to December 31, 2017, with the objective of reaching 8% participation in the national demand with the generation of renewable sources and establishing as a second stage objective to reach 20% of participation by the year 2025, and setting mid goals of 12%, 16%, and 18% for the end of the years 2019, 2021, and 2023. The sanctioned Law creates a Fiduciary Fund (FODER) that could finance projects, give tax benefits to the renewable energy projects, and establish the non application of The electricity installations are subject to environmental specific tributes, national royalties, regional and municipal laws and regulations, federal and local, including Law until December 31, 2025. The clients categorized as Large Nº24,051, or Dangerous Waste Law, and its annexed Users (>300 Kw) should individually fulfill the participation regulations. of the renewables, establishing that the price of these contracts cannot be superior to 113 US$/ MWh, and setting In the electricity sector, certain obligations to inform penalties to those who do not fulfill these objectives. The and monitor impose on emission standards. The non- law regulations are still pending. 111 Regulatory Framework of the Electricity IndustryBrazil Industry Structure each of the generator providers. The price at which spot market transactions are settled is called the Settlement Price of Differences (PLD), which takes into account the risk aversion curve of the agents. Transmission works under monopoly conditions. The Brazilian government sets tariffs for transmission for the The Brazilian electricity industry is organized in a large companies. The charge for transmission is fixed and the interconnected system, the SIN (National Interconnected transmission revenue does not depend on the amount of System), which comprises most of the regions of Brazil, electricity transmitted. and several other smaller isolated systems. The generation, transmission, distribution and commercialization are legally Distribution is a public service that also works under separated activities in Brazil. monopoly conditions and is provided by companies that in turn have received concessions. Distribution companies in The industry is regulated by the Federal Government the Brazilian system are not entitled to: (i) develop activities through the Ministry of Mines and Energy (MME) and also related to the generation or transmission of electricity; (ii) by the National Electric Energy Agency (ANEEL). sell electricity to unregulated customers, except to those within its concession area and under the same conditions Pursuant to Law No. 10,848 of 2004, the wholesale and tariffs applicable to its captive clients of the Regulated electricity market as a tool for spot price formation is Market; (iii) maintain, directly or indirectly, equity interest residual. On the other hand, the wholesale price is based in any other company, corporation or partnership; or (iv) on the average bid prices, with independent bidding develop activities that are not related to their respective processes for existing energy and “new” energy. The latter concessions, except those permitted by law or in the include long-term contracts in which the new generation relevant concession agreement. Generation companies projects must cover the growth of demand foreseen by are not authorized to have equity interest in distribution the distributors. The “old” energy tenders consider shorter companies in surplus of 10 percent. contracting periods and seek to meet the contracting needs of the distributors that arise from the expiration The unregulated market includes the sale of electricity of previous contracts. Each bidding process is centrally between generation concessionaires, independent coordinated, the authority defines maximum prices and, producers, self-producers, electricity traders, electricity as a result, contracts are signed where all distributors importers, unregulated consumers and special customers. participating in the process buy at fair appointment from It also includes contracts between generators and 112 Annual Report Enel Américas 2017distributors existing under the old regulatory framework, increase the security of the power supply in the National until its expiration. New contracts must be adjusted to the Interconnected System. Since 2015, the auction has been new regulatory framework. According to the specifications created for hydroelectric plants that have not extended established in Law 9,427/96, unregulated consumers in their concession contracts, according to Law 12,783/2013. Brazil are those that: (i) demand a capacity of at least 3,000 This auction allows a part of the generated energy to kW and choose to contract the supply of energy directly be sold in quotas and the other part in the free market with generators or marketers; or (ii) demand a capacity in (the percentage is defined in each auction). The winner the range of 500 to 3,000 kW and choose to contract the is the entrepreneur who pays the biggest bonus for the power supply directly with generators or traders of energy. concession. The Brazilian system is coordinated by the Brazilian The new energy tenders include long-term contracts (20- Electrical System Operator (ONS) and is divided into four 25 years for thermal plants, 30 years for hydro, 20 years sub-systems: Southeast/Center-West, South, Northeast for solar and wind), in which the new generation projects and North. In addition to the Brazilian system there are also must cover the growth of demand forecasted by the some isolated systems; in other words, those systems distributors. The “old” energy tenders consider shorter that are not part of the Brazilian system and are generally contracting periods and seek to meet the contracting located in the northern and northeastern regions of Brazil, needs of the distributors that arise from the expiration of and have only coal or oil fired thermal power plants as their previous contracts, so that energy can be sold at lower unique source of energy. prices. Each tender process is centrally coordinated, Regulation in Generation Companies the authority defines maximum prices and as a result, contracts are signed where all the distributors participating in the process buy fairly appointed from each generation company. The Generation Agents, who can be public generation The Decree 5,163/2004 establishes that selling agents concessionaires, IPPs or auto producers, as well as should ensure 100% of physical coverage for their energy Marketing Agents, can sell electricity in two contracting and power contracts. This coverage can be constituted by environments. First, the Regulated Contracting Environment physical guarantees of their own generating plants or of (ACR), where distribution companies operate, in which the any other plant, the latter through a contract of purchase purchase of energy must be done within the framework of of energy or power. Among other aspects, Resolution the bidding process coordinated by ANEEL; and the other 109/2004 of ANEEL specifies that when these limits are denominated as the Free Contracting Environment (ACL) not met, agents are subject to financial penalties. in which energy purchases are made directly between suppliers and their customers. Regardless of the ACR or In 2016, the economic context of the country has led to ACL, the sales contracts of the generators are registered in a situation of surplus energy, so some measures were the Câmara de Comercialização de Energia Elétrica (CCEE) established to reduce surpluses of distribution companies, and form part of the basis for quantifying and determining such as the possibility of bilateral agreements between adjustments for differences in the short-term market. generation and distribution companies for temporary, In relation to market regulation, 100% of the energy not effective and still the distributors have surpluses over partial or termination of the PPA. But these measures were demanded by the distributors must be satisfied through the review for consumers. contracts in the current regulated environment. As such, the regulated purchase price for the formation of tariffs for Law 13,360 was enacted in 2016 establishing several final users is based on the average prices of tender offers, changes to the sector, among which are: with independent bidding processes for ‘new energy’, ‘existing energy’ and ‘reserve energy’. The “new” and Permits for distribution companies that sell the surplus “old” energy auctions are made to meet the demand of contracts to free consumers. the distributors market. Reserve Auctions are made to 113 Regulatory Framework of the Electricity IndustryRenewal of hydroelectric concessions <= cost of 50MV. per MWh and the A-2 offered 423 MW of energy at an average price of BRL$174.52 per MWh. Compensation for hydroelectric generators due to thermal generation without the order of merit. Changes in the periods of the auctions (terms). Regulation in Distribution Companies In search of a solution to the impacts caused by droughts, In the regulated market, distribution companies buy in December 2015 ANEEL approved the conditions for a electricity through biddings that are regulated by ANEEL “renegotiation” of hydrological risk with the generation agents and organized by CCEE. Distributors must purchase participating in the Energy Reassignment Mechanism (MRE). electricity in public biddings. The Government also has the To adhere to the “renegotiation”, it was necessary to waive right to call for special biddings for renewable electricity the lawsuits. There was significant adhesion by regulated (biomass, mini hydro, solar and wind power plants). ANEEL market centers, however, there was no adhesion of power and CCEE hold annual bids. The recruitment system is plants in the free market, because the conditions were not multilateral, with generating companies that sign contracts interesting. Currently, there is still a part of generators with with all the distributors that convene the biddings. provisional and/or precautionary measures that limit their risk and transfer part of the costs to consumers. The Concessions Law establishes three types of tariff reviews or adjustments to final consumers: The Tariff ANEEL annually validates, by resolution, the minimum Repositioning Index (IRT), which implies an annual and maximum values of the PLD, so that the maximum adjustment of the rate for inflation; The Ordinary Tariff Review and minimum PLD are set at BRL$533.82/MWh and (RTO) to be carried out every four or five years according BRL$33.68/MWh, respectively for 2017. The calculation to each concession contract, and the Extraordinary Tariff of the maximum PLD considers the variable costs of Review (RTE), which are carried out when a relevant event operation of the thermoelectric plants. For the minimum occurs in the sector that significantly affects the value of PLD is considered the costs of operation and maintenance the tariff. In this way, the Law guarantees an economic of hydroelectric power plants. and financial balance for a company in case that there is Regarding regulated power biddings, in order to reconstitute that the cost of components for Parcel A, such as energy the energy supply, in 2016 three biddings were carried out purchases or taxes, increase significantly within the period with the energy assigned: of two annual tariff adjustments, the concessionaire may a substantial change in its operating costs. In the event submit a formal request to ANEEL for these costs to be 1 bidding A-1: 21 MW-mean, with two years of energy Transferred to the final clients. supply. > >1 bidding Energy Reserve: 9.,4 MW-mean, assigned to Every tariff revisions and repositioning are approved by small hydro at an average price of BRL$227.02 per MWh. ANEEL. > 1 bidding A-5: 201,8 MW-mean, assigned to Hydro (17%), mini hydro (41%), Biomass (40%) and Gas (2%)) In tariff revisions (RTO and RTE), ANEEL reviews the at an average price of BRL$ 198.59/ MWh. rates in response to changes in energy costs and market conditions. When adjusting distribution rates, ANEEL In 2017 four tenders were offered: (i) A-4, on 12/18/2017, divides the Annual Reference Value, that is, the costs of the the offer was 2,202 MW of energy at an average price of distribution companies in: (i) costs unmanageable by the BRL$144.51 per MWh (3% hydro, 4% thermal, 16% wind distributor, also called “Parcel A”, and (ii) manageable costs and 77% solar); (ii) A-6, on 12/20/2017, the offer was 27.366 by the distributor or “Parcel B”, the latter corresponding to MW of energy at an average price of BRL$189.45 per MWh what we know as Value Added Distribution (VAD). (3% hydro, 72% thermal, 25% wind); (iii) A-1 and A-2, on 12/22/2017, the A-1 tender offered 288 MW of average The ordinary tariff review takes into account the entire tariff energy commercialized at an average price of BRL$177.46 setting structure of the company, including the costs of 114 Annual Report Enel Américas 2017 providing services, the costs of buying energy as well as the Due to the mismatches between the costs recognized in return for the investor. Under its concession contracts, Enel tariff and the real costs outside the management of the Distribución Ceará and Enel Distribución Río are subject to distributor, and intensified by the implicit costs of the tariff revisions every four and five years, respectively. The drought, ANEEL, in January 2015, began to implement a basis of the assets to calculate the return allowed to the system (known as Tariff Flags) of additional monthly charge investor is the replacement market value, depreciated over on the consumer rate provided that the marginal cost of its useful life from an accounting standpoint, and the rate the system reaches levels above the regulatory standard. of return on the distribution asset is based on the Average The objective of the regulator is to give the consumer an Capital Cost Weighted, or WACC for a model company. The economic signal of the cost of the generation already in the WACC is reviewed in each rate cycle. The value of the WACC subsequent month, moving forward an amount (of right) for distribution is currently in effect at 12.26% real pre-tax that the Distributor would only collect it in next tariff event. rate. The regulatory mechanisms ensure the creation of of flags: green, yellow, red level 1 and red level 2. This mechanism - described below - consists of four levels regulatory assets or liabilities, whose tariff rebuilding occurs in subsequent tariff adjustments (March 15 for Enel Values Applied for Tariff in 2017 Distribución Río and April 22 for Enel Distribución Ceará). This mechanism has existed since 2001, and is called Since November 2017, the value of the banners is: the Parcel A Securities Compensation Account (CVA). Its objective is to keep constant operating margins for the > Green tariff (Favorable conditions for energy generation): concessionaire in order not to allow tariff gains/losses due Without tariff surcharge. to the variation of Parcel A costs. > Yellow tariff (Less favorable generation conditions): BRL$1.00 per 100 (kWh) The Securities Compensation Account (“CVA” for the > Red Tariff - level 1 (More expensive generation Brazilian abbreviation) helps to maintain market stability conditions): BRL$3.00 per 100 (kWh) and allows the creation of deferred costs, which is > Red Tariff - level 2 (More expensive generation compensated by tariff adjustments based on the necessary conditions): BRL$5.00 per100 (kWh) rates to compensate for the deficits from the previous year. In summary, with this mechanism the cost of generation In December 2014 the distributors in Brazil, including that is currently transferred to the customer only once a the Enel Group, signed an addendum to the concession year (when the annual rate adjustment is made) will have contract that allows these regulatory assets (CVA’s and a monthly variation, therefore the customer will be able to others) to be part of the indemnifying assets at the end have a better management of the electricity consumption. of the concession, in the event that it is not be possible In other words, consumers will be aware of a lower tariff to compensate through tariffs at that time. Thus, in readjustment, since they are already paying a higher value accordance with the IFRS rules, the accounting of these during the month. regulatory assets/ liabilities is allowed. To cover the energy surcharge caused by the drought in 2014, the Government has created the ACR account through bank loans to be paid within two years for the tariff. In 2014 the distributors used an approximate amount of BRL$ 18 billion of the ACR account, however, it was not enough to cover the entire deficit. A new loan to the ACR account was approved in March 2015 to cover the deficits of November and December of 2014. An extension of the repayment term for all loans was approved, which should now be paid in 54 months starting from November 2015. Regulation in Transmission Any electricity market agent that produces or consumes energy is authorized to use the Basic Network. Free market consumers also have this right, subject to compliance with certain technical and legal requirements. Free access is guaranteed by law and supervised by ANEEL. The operation and administration of the Basic Network is the responsibility of the ONS, which also has the responsibility of managing the dispatch of energy from 115 Regulatory Framework of the Electricity Industrythe plants in optimum conditions, involving the use of the S.A. For low-tension consumers, particularly residential, interconnected system, reservoirs and thermal plants. the average adjustment to be applied will be -6.24%. Regarding medium to high-tension clients, the average As of April 5, 2011, it was published in the Official adjustment to be applied will be -7.12%. Gazette, the Ministerial Docks 210/2011 and 211/2011, which equate the two interconnection lines of the Energy Interconnection Company, S.A. to concessions of public service, with payment according to a regulated toll. The Annual Permitted Remuneration (hereinafter “RAP”) is adjusted annually, in June, by the National Broad Consumer Price Index (“IPCA”) with tariff revisions every four years. It Tariff Readjustment for Enel Distribución Ceará S.A. (former Coelce) was defined a Gross Remuneration Base of BRL$ $1,760 On April 20, 2017, ANEEL standardized the tariff adjustment million (US $885 million) and a Net Base of BRL$ 1,160 of Enel Distribución Ceará through Resolution N° 2,223. million (US$ 585 million). In 2012 ANEEL authorized the This annual tariff adjustment of Enel Distribución Ceará implementation of reinforcements in the transmission produced an average effect for customers of 0.15%, being facilities, recognizing an additional investment of BRL$47 1.44% in average for High Tension consumers and -0.39% million (US$ 23 million), in the Remuneration Base. The for Low Tension consumers. applicable remuneration rate was defined in agreement with the current regulation at 7.24% (real after tax). The The transmission costs had a huge impact in this adjustment authorization period is until June 2020, for Line 1, and until (the variation was 140.28% compared to the reference July 2022, for Line 2, with a welfare compensation for values of the previous tariff process), where the average unamortized investments. effect was 3.23%. This is explained by the estimation of 2017 Adjustments Tariff Readjustment for Enel Distribución Río S.A. (former Ampla) Enel Distribución Río S.A. singed on March 14, 2017, the New Concession Contract (Sixth modification) resulting from the public hearings N° 095 y N° 058. In these hearings the discussion was focused on the regulation and the application of the tariffs procedures for distribution companies that register by their own choice for the application of the modifications of the concession contract, pursuant to Decree Nº 2194/2016. These new rules were applied for the definition of this adjustment of 2017, which include, among other changes, the use of the IPCA index replacing the general market price index (“IGP-M”), part of the unrecoverable revenues of Parcel B were transferred to Parcel A and new indexed of regulatory losses were applied. As a result, ANEEL approved an average adjustment of -6.51% for Enel Distribución Río 116 higher costs, which were included from July 2017. Readjustment for Enel Cien Resolution nº 2258 established that annual revenues allowed (RAP) for concessionaires of public service of electricity transmission, would be related to the availability of transmission facilities under their responsibility. The values of Cien are: Garabi I (RAP: BRL$167,874,943.85 and PA adjusted: - BRL$9,581,554.75) and Garabi II (RAP: BRL$174,388,271.81 and PA adjusted: - BRL$9,953,306.53). for Readjustment Distribución Goiás Celg) Enel (former On October 17, 2017, ANEEL standardized the tariff adjustment of Enel Distribución Goiás through Resolution N° 2,317. This annual tariff adjustment Enel Distribución Goiás produced an average effect for customers of 14.65%, in average was 12.03% for High Tension customers and 15.89% for Low Tension customers. Annual Report Enel Américas 2017Colombia Structure of the Industry The CREG is empowered to issue regulations governing technical and commercial operations as well as tariffs for regulated activities. The main functions of CREG are to establish the conditions for the progressive liberalization of the electricity sector towards an open and competitive market, to approve charges for networks and transmission and distribution costs for the supply of regulated Law 142 of the Home Public Services, and the 143, customers, to establish the methodology to calculate and Electricity Law, structurally reformed the Colombian set maximum tariffs for the supply of the regulated market, electricity sector both enacted in 1994. According to Law establish standards for the planning and coordination of the 143 of 1994, the different economic agents, private, public operations of the System, establish technical requirements or mixed, can participate in the activities of the sector, and for quality, reliability and security of supply, and protect the have the liberty to develop their functions in the context of rights of customers. free competition in the market. To operate or start projects, it must be obtained, from the competent authorities, the The Wholesale Energy Market in Colombia is based on authorization for the different environmental, sanitary a competitive market model and operates under open and water rights, and those where municipal sanction is access principles. The operation and administration of the required. MEM is centralized in a Market Operator made up of the Administrator of the Trade Exchange System (ASIC) and the The Ministry of Mines and Energy (MME) defines the National Dispatch Center (CND). Government’s policies for the energy sector. Other government entities that play an important role in the The generation sector is organized on a competitive basis. electricity industry include: Superintendence of Home The electricity transactions in the WEM are carried out Public Services (SSPD), entity that monitors and audits under the modalities of the spot market of energy (Short all the public service companies; the Energy and Gas term or daily market); Bilateral Contracts (Long Term Regulation Commission (CREG), which regulates electricity, Market) and Reliability Charge. Generation companies must natural gas, liquefied petroleum gas (LPG), and liquid participate in the central office in a mandatory manner, fuels; the Energy Mining Planning Unit (UPME), which is with all of their generation plants or units connected to responsible for the planning and expansion of the network the Colombian system whose capacities are equal to 20 and the Superintendence of Industry and Commerce (SIC) MW or higher (plants with capacities between 10 and 20 which is the national authority for competition protection issues. 117 Regulatory Framework of the Electricity IndustryMW can optionally participate). The generation companies In the short-term energy market, the CND receives, each that participate in the central office must declare the day, the offers of prices and the declaration of commercial commercial availability of their generation resources and availability for each hour of the following day, of all the offer the price at which they wish to sell it. This energy is generators participating in the wholesale market. Based on centrally dispatched by the National Dispatch Center (CND) this information, the CND performs an economic dispatch with economic optimization criteria and respecting the through an optimized procedure for the next 24-hour period electrical and operational restrictions of the system. of the following day, taking into account the electrical and operation restrictions of the system, as well as other Commercialization consists of the intermediation between conditions necessary to satisfy the expected energy the actors that provide electricity generation, transmission demand for the next day in safe, reliable and economic and distribution services, and the users of these services. manner from the cost point of view. Unlike the rest of the The commercialization can be carried out along with or countries where the office is centralized based on variable without other activities of the electric sector. costs of production, in Colombia, the office is based on prices offered by agents. Transmission operates under monopoly conditions with a guaranteed annual fixed income, which is determined by The energy market is a market of adjustments, where the the new replacement value of networks and equipment excess energy is sold or bought against the real energy and by the value resulting from the bidding processes demand of generators and retailers. The power exchange that add new projects for the expansion of the National the determined spot price is established by the ASIC Transmission System (STN). This value is distributed among after the day of operation is established by means of an all the retailers in the market in proportion to their energy optimized procedure for the 24-hour period called the ideal demands. The National Interconnected System (SIN) dispatch, which implies an infinite transmission capacity in supplies 98% of the national demand. Non-interconnected the network and takes into account the initial conditions systems serve isolated areas of the country. of operation, thus establishing which generators had to be Distribution is defined as the operation of local distribution all generators that are dispatched for merit of price is the networks and regional transmission. Any customer can price of the most expensive generator dispatched every dispatched to satisfy the actual demand. The price paid to have access to a distribution network in which he pays hour under the ideal dispatch. a connection fee. Distribution companies, or network operators, are responsible for the planning, investment, The cost differences between the ‘planned dispatch’ and operation and maintenance of electricity grids with the ‘optimal dispatch’ are called ‘restriction costs’. The cost voltages below 220 KV. of each restriction is allocated to start with to the agent responsible for the restriction and when it is not possible Regulation in Generation Companies to identify an agent it is distributed proportionally to all Colombian system traders according to their demanded energy, and these costs are transferred to the final The Colombian State can participate in the execution customers. and exploitation of the generation projects as well as the Generators connected to the Colombian system can also private sector. The Law 142 of 1994, established that the participate in the “Reliability payment”, which is a mechanism legal regime of public services and the Law 143 of 1994 that aims to encourage investment in the generating park to focused, particularly, in the service of electric power ensure that the country’s demand is met in the long term. service, determined the types of entities authorized to The Charge consists of the assignment of Firm Energy provide residential public service, in this sense it was Obligations (OEF) through a descending auction for new created the “Public Service Company” as the fundamental agents interested in developing generation projects, who for this provision. must guarantee the System that amount of energy for a 118 Annual Report Enel Américas 2017given period. The allocation for existing generators is made electricity market. In particular, emphasis was made in: i. annually and for new projects for up to 20 years. The OEF the revision of key issues of the Wholesale Energy (MEM is a commitment on the part of the generating company, is its Spanish acronym), mainly in the modification of the backed by its physical resources, which provide support to calculation methodology of Scarcity Price. This is a relevant that firm in the production of energy. The generator that variable in the Reliability payment scheme, which finally acquires an OEF will receive fixed compensation during was embodied in Resolution CREG 140 of 2017, which the commitment period, whether or not the fulfillment of greatly mitigated the decouple risk between such value its obligation is required. and the variable costs of generation resources, enabling to reflect the market and gradually, the local fuel costs; and; The price for each KWh hour of OEF corresponds to the ii. In the incorporation of Non Conventional Renewable closing value in the auction for the firm energy or Reliability Sources (FRNCE) to the system, where the CREG approved payment. When this firm energy is required, what happens the methodology that establishes the Firm Energy for solar when the spot price overpasses the shortage prices, and wind resources. Proposals were formulated to the an agent fulfillment balance, where they verify the ideal regulator related to the contracting schedules, including dispatch if the agent covered its OEF with their own long, medium and short-term visions, and complementary resources and delivered surplus or another agent covered services for its development and promotion. the OEF, in which case the differences valued at the spot price are balanced. In 2014 Law 1,715 was enacted, which regulated the integration of NCRE to the National Energy System, and Regulation in Distribution Companies whose purpose was to promote the development and use In Colombia, distribution companies are free to purchase of non-conventional renewable sources of energy and to their supplies, being able to define the conditions of the promote an efficient management of these sources. public bidding processes to acquire the energy required for the regulated market and may also go to the spot market That same year, the CREG issued the Statute of Risk of to buy energy. The price paid by the end user reflects an Shortage, which is a mechanism of last resort that acts average of the purchase price. Since 2004, CREG has been when under conditions of critical hydrology, the market working on a proposal to modify the contracting operation in fundamentals do not behave as expected. In general, the Colombian market, called Mercado Organizado -MOR- the scheme consists in the implementation of market that would become an electronic system of contracts. monitoring indicators, which helps to identify if the price This mechanism would replace current tenders for energy signals (energy market) is coherent with future energy auctions with standardized commercial conditions, where estimates and current hydrological conditions of the the demand to be contracted would be treated as a single system. aggregate demand. If market parameters for monitoring capture any alert and Distribution charges are set by the CREG based on the risk conditions, we proceed to declare a risk of shortage new replacement value of existing distribution assets, cost period, basically consisting of a scheme of sale and of capital, non-electric assets; as well as operational and embalming of energy, which guarantees that the system maintenance costs for each company, and are defined for will have the necessary reserves to fulfill the demand. If four different voltage levels, as follows: Level 1 less than 1 water containment is achieved through the intervention kV, Level 2 greater than or equal to 1 kV and less than 30 of supply prices of hydraulic agents with capacity in their kV, Level 3 greater than or equal to 30 kV and less than 57.5 reservoirs, thus allowing the use of the thermal resources kV and Level 4 up to or equal to 57.5 kV and less than 220 necessary to ensure the reliability of the system. kV. Voltage Levels 1, 2 and 3 are called Local Distribution Systems (SDL) and Level 4 is called the Regional During 2017 regulatory management was focused towards Transmission System (STR in its Spanish acronym). the analysis and adjustment of the normativity of the 119 Regulatory Framework of the Electricity IndustryIn 2009, after auditing the information reported by the companies, CREG determined the applicable distribution charges, which are set for a period of five years, and updated monthly according to the producer price index. Regulation of Transmission The methodology for calculating distribution charges Transmission networks operating at 220 kV or above includes an incentive scheme for administration, operation constitute the National Transmission System (STN). and maintenance costs based on the quality of service. The transmission fee includes a charge that covers the For energy losses, the regulation establishes a path of operating costs of the facilities, and a charge for use that recognized loss indexes to be included in the tariff. applies only to the merchants who transfer it directly to the The review of distribution charges began in 2013 with the final users. publication of the remuneration methodology proposed by The CREG guarantees transmission companies a fixed resolution CREG no. 043/2013. These bases were increased annual income. This income is determined by the reposition by CREG Resolution No. 079/2014 which contains the value of the network and equipment, and by the resulting purposes and guidelines for remuneration of distribution value of the bidding process that have awarded new and Resolution CREG No. 179/2014, Resolution CREG No. projects for the expansion of STN. This value is attributed 024/2016, Resolution CREG Nº 176/2016 and Resolution the retailers the STN in proportion to the energy demanded. CREG No. 019/2017 define a proposal of remuneration methodology. The construction, operation and maintenance of the new projects is assigned to the company that offers the lowest Finally, after four resolutions subject to consultation, on present value of cash flows necessary to carry it out. February 2, 2018 the final resolution CREG 015 was issued. This norm defines the beginning of a new regulatory period The revision of regulated transmission charges began in where the regulator introduced replacement incentives, 2013 with the publication of the pay rate methodology including depreciation as part of the tariff formula, proposed by resolution CREG no. 042/2013. These pay incentives to the quality of service that should improve rate is complemented by the development of the purposes at least 8% per year and defined the management of and guidelines for the remuneration of transmission for regulatory adjustments to remunerate through tariffs the the period 2015-2019, which was presented in resolution investments and the operations related to Infrastructure of CREG No. 078/2014 and draft resolutions that have advanced measurement. been submitted for consultation, Resolution CREG No. 178/2014, Resolution CREG Nº 023/2016 and Resolution Furthermore, on February 5, 2018 the Regulation CREG Nº 177/2016 that define a proposal of remuneration Commission enacted resolution 016 of 2018, which defines methodology. This resolution was defined by the MME and the return rate (WACC) for the electricity distribution activity aims to guarantee adequate assets and timely extensions. in the national interconnected system and the scheme of It is expected that the new methodology of remuneration maximum revenue for the new tariff process. The rate of the transmission and the new charges of transmission value is the result of the application of the methodology will be published during 2018. approved in Resolution CREG 095 of 2015. The value of WACC for 2018 was defined in 12.4%, and for 2019 onwards will be 11.8% real before taxes. 120 Annual Report Enel Américas 2017Regulation in Commercialization Trading charges for regulated customers are established in accordance with CREG Resolution no. 180/2014. The main changes in this formula were the creation of a monthly fixed charge that covers operating expenses plus a variable The commercialization market is divided into regulated of income for traders covering credit risk, working capital customers and unregulated customers. Customers in subsidies and other selling costs. the free or unregulated market can freely contract their electrical supply directly from generator or distributor In January 2017, the Regulation Commission -CREG acting as traders, or from a pure trader. The market for approved the merger of Codensa and EEC markets. This is non-regulated customers consists of customers with a why a unique regulated tariff is applied from that date for maximum demand of more than 0.1 MW or a minimum users of the market currently served by Codensa. monthly consumption of 55 MWh. The commercialization or trading can be performed by generators, distributors or independent agents that meet certain requirements. The parties freely agree on transaction prices for unregulated customers. The trader of energy is responsible for billing electricity costs to final consumers and transferring payments to different agents in the industry. Trading for regulated customers is subject to the “Regulated Freedom Regime” in which tariffs are set by each seller using a combination of the general cost formulas determined by the CREG and the individual trading costs approved by the CREG for each seller. The rates include, but are not limited to, costs of energy supply, transmission charges, distribution charges and a margin of commercialization. In addition, the final costs of the service are affected by subsidies or contributions that are applied according to the socioeconomic level of each user. Environmental Regulation The legal framework for environmental regulation in Colombia was established in Law 99/1993, which also created the Ministry of Environment as the authority for the definition of environmental policies. The Ministry defines, issues and executes policies and regulations focused on the recovery, conservation, protection, organization, administration and use of renewable resources. Any entity contemplating the development of projects or activities related to the generation, interconnection, transmission or distribution of electricity, which may cause an impact, deterioration and/or introduce significant or notorious changes to the environmental landscape, must apply for an environmental license prior to the start of activities. 121 Regulatory Framework of the Electricity Industry Law No. 99 established that generation power plants already operating, that have a total installed capacity of more than 10 MW, should contribute to the conservation of the environment, transferring to municipalities and environmental corporations in the area where the power plants are located, a percentage associated with the generation of energy. Hydroelectric plants must pay 6% of Peru Industry Structure their generation and thermal plants must pay 4% of their The general legal framework applicable to the Peruvian generation, with rates that are determined annually. electricity industry is primarily comprised by the Electric Concessions Law (Decree Law Nº 25,844 from 1992) and In 2011, Decree 3,570 established the new structure of its regulatory norms. the environmental sector thus creating the Ministry of Environment and Sustainable Development (previously, The Ministry of Energy and Mining (MINEM) defines the functions of the Ministry of Environment were energy politics applicable on a national level, jointly established along with the functions of the Ministry of regulates with the Ministry of the Environment, the Housing). In the same year, Decree 3,573 created the environmental aspects applicable to the energy sector and National Environmental Licensing Authority as the entity is the competent authority for the granting and expiration responsible for granting and monitoring environmental of authorizations and concessions for the activities related licenses, permits and procedures of the Ministry of to the generation, transmission and distribution of energy. Environment and Sustainable Development. During the COP21 in Paris in 2015, Colombia committed and Mining (Osinergmin) is the regulatory entity that to reduce 20% emissions as of 2030 with respect the controls and oversees the enforcement of legal and The Supervising Organism of the investment in Energy reference baseline. technical norms related to the electricity, hydrocarbon, and mining activities, and enforces the obligations established In 2015, on the recommendation of the OECD, the in concession contracts. On its part, the Regulating regulation of the environmental sector was consolidated in Osinergmin Tariffs Agency (GRT) is the competent authority the Decree 1076 of 2015. for the determination of regulated tariffs. Osinergmin also controls and supervises the bidding processes required by In general and as of today, the environmental regulation distributing companies for the purchase of energy from for the electricity sector has been focused on regulating generators. aspects related to: i) emissions from thermal plants; (ii) formulation, issuance and implementation of the National Meanwhile, the Environmental Evaluation and Enforcement Policy for Integral Management of Water Resources, Organism (OEFA), which depends on the Ministry of updating the regulations associated with landfills, regulation the Environment, is responsible for the supervision and the methodology for the calculation of the environmental enforcement of the environmental obligations contained in flow, and structuring and management of watersheds); the approved environmental instruments. (iii) environmental licensing and compensations, for subtraction of forest reserves and exploitation, for loss of The Economic Operation System Committee (COES) is the biodiversity for projects bound to environmental licensing; National Electric Interconnected System Operator (SEIN), (iv) updating the regulatory framework for environmental coordinates the dispatch of generation units in function of licensing and regulating the environmental sanctioning the minimum cost, and prepares diverse studies that serve regime. 122 Annual Report Enel Américas 2017 as a base to annually calculate the bar prices, manages the Generation companies can sell their energy directly to short term market, and elaborates the Guaranteed System distribution companies and free clients and liquidate their Transmission Plan. In the COES generating, transmitting, differences in the spot market at marginal costs. The and distributing companies are represented, as are Big sales to non-regulated clients are carried out in prices Users (free clients whose consumption is higher than and conditions mutually agreed, which includes fees and 10MW). compensations by the use of transmission systems, and if it is the case, fees for the use of the distribution networks. In rural areas there are small isolated electric systems The Electric Concessions Law allows the subscription of that supply electricity in specific areas, which represent bilateral contracts of a price no greater than the Bar Rates, approximately 6% of the total national production. in the case of regulated clients, or at a price agreed by all parts in the case of unregulated clients. As well as this The main characteristics of the electric industry in Peru bilateral method, Law 28,832 from 2006, denominated are: (i) the separation of the three activities: generation, the Law to Ensure Efficient Development of Electric transmission, and distribution; (ii) open market for the Generating, also established the possibility that distributors supply of energy to unregulated clients; (iii) a regulated can satisfy regulated and unregulated client demands by price system, primarily based on a long and short term concluded agreements after a power bidding process and bidding regimen. Regulation of Generation Companies energy supervised by Osinergmin. The approval of this mechanism is important for the generators because it allows them to dispose of a stable price during the contract life, which is not set by the regulator and can have duration of up to 20 years. Generation companies that own or operate a generation Due to the introduction of bidding mechanisms, a large plant with an installed capacity larger that 500 KW require portion of the contracts to sell energy to distributing a definitive concessions given by the MINEM. companies to get the client’s attention, comes from these The dispatch coordination of electricity operations, the bids. Just a small portion of the electricity bought by determination of the spot prices and the management of distribution companies, is maintained under the bilateral economic transactions that occur in the SEIN are managed contract scheme. by the COES. 123 Regulatory Framework of the Electricity IndustryAnother norm that impacted the electric market was On September 2015 the Decree N° 1,221 was published, Urgent Decree N° 049-2008, which introduced the so- through which the fixed VAD (Distribution Added Value) called “Ideal Marginal Cost”, which assumes that for establishes that it will be carried out every four years and economic dispatch effects, SEIN marginal costs in the will be calculated for each company (before this decree the short term are determined considering that there are no VAD was calculated for a company that was representative restrictions in natural gas (production or transport), nor for of the group and typical sector, and this VAD is applied to electricity transmission; and that marginal costs cannot be all of the companies that made up the respective group). superior to a limit value defined by the Ministry of Energy Also, an additional charge to the fees in technologically and Mining, said Urgent Decree was valid until October 1, innovative projects and efficient energy projects previously 2017. approved by the Osinergmin. Incentives were offered to improve the quality of service and the possibility to expand With regards to the transactions in the wholesale market, the concession areas for distribution companies in rural the Regulation of the Electricity Wholesale Market areas next to their concession zones. (Regulation MME) was approved through Supreme Decree Nº 026-2016-EM. The main aspects are the following: The The real return on the investment of a distribution “MME” is comprised by the short-term market (“MCP” company depends on its performance with respect to in its Spanish acronym) and the allocation mechanisms of the standards set by Osinergmin for a theoretical model complementary services, operational inflexibilities and company. The tariff system allows a greater return to the the allocation of congestion revenues. The authorized distribution companies that are more efficient than the participants to buy in the MCP are: generators to serve model company. The preliminary tariffs are determined by their supply contracts, distribution companies to serve free taking as a base the results of a study hired the company, customers for up to 10% of its maximum demand; and large corrected according to the Osinergmin. Preliminary tariffs users to serve up to 10% of its maximum demand. COES are checked to ensure that the internal return rates are will calculate the energy marginal costs and the congestion 12% with a +/- 4% variation. Also, the tariffs are indexed marginal costs. Participants will need payment guarantees to the exchange rate, the price index to the greatest (IPM), of their obligations in the MME. In addition, action from and the commodities price as is copper and aluminum, COES are incorporated in the event of a payment default with which Peru has no exchange risks. of a participant. In Peru the capacity payment is given by the amount that defined the Edelnor tariffs for the period of November compensates the development of turbine gas, as a marginal 2013 to October 2017. The same have been extended until unit to contribute to the system’s demand. Similar to Chile, October 31, 2018, through the Ministerial Resolution N° the capacity payment is independent from dispatch and 530-2016-MEM/DM published in December 2016. During the last setting tariff process, the OSINERGMIN remunerates the availability and contribution to the aimed reserve margin decided by the competent authorities. Regulation for Distribution Companies The electricity tariff for regulated clients includes charges for energy and power, for the generation and transmission, and the Distribution Added Value (VAD) that considers a regulated return for investments, fixed operating charges and maintenance, and a standard percentage for energy losses in distribution. Regulation of Transmission Transmission activities are defined under different regimes. The facilities built before 2006 are divided in the Main System, that is for common used and allows the flow of energy through the national net, and the Secondary System is mostly unidirectional and are useful for evacuating energy from one generation power plant or to take energy to the final consumer. 124 Annual Report Enel Américas 2017For its part, the facilities built after 2006 are divided in: Guaranteed System formed by lines for common use, part of the Transmission Plan developed by the COES and whose toll y paid by the whole demand of the network, and the Complementary System whose lines are connected to a power plant or to a user of the system and are paid by the beneficiary. Environmental Regulation The environmental legal framework applicable to the activities related to energy in Peru is established in the Environmental General Law (Law N° 28,611) and in the Environmental Protection Rules for Electric Activities (Supreme Decree 029-94-EM). The Transmission Plan, elaborated by the COES and approved by the MINEM, determines the development of the Guaranteed System lines, which are bid through a BOOT framework with a maximum duration of 30 years. The transmission concessions of the Guaranteed System receive an annual fixed income from said bids. The Complementary System lines are developed through investment plans presented by the agents and approved by the Osinergmin, an entity that calculates the average annual cost to remunerate for each installation, considering the standard investment, operating, and maintenance costs, with an updated rate of 12% before tax and a useful life of 30 years. The Legislative Decree 1,002 creates a promotional regime for non-conventional renewable energies (“ERNC” in its Spanish acronym). Guaranteed revenues will be paid by the demand through a tariff charge included in the connection toll. Renewable generation is promoted through auctions. The Regulation included in DL 1002 (Supreme Decree 050-2008-EM) incentives electricity generation of Non- Conventional Renewable Energies (ERNC in its Spanish acronym). This Decree establishes that up to 5% of electricity demand of the Interconnected System can be provided by non-conventional renewable sources. The 5% limit may be reviewed by the relevant authorities in accordance with the National Plan for Renewable Energies. The technologies considered as renewable resources are: biomass, wind, tidal energy, geothermic, solar and mini- hydro (hydroelectric with capacity below 20 MW). As of December 2017 the proportion of NCRE was 2.8% in the SEIN demand, as a result of the fourth tender adjudicated in 2016. The percentage is estimated to be 4.0% in December 2018. 125 Regulatory Framework of the Electricity Industry16Description of the electricity business by country 126 Annual Report Enel Américas 2017127 Letter from the ChairmanElectricity Generation In this segment, Enel Américas owns operating subsidiaries in Argentina, Brazil, Colombia and Peru. As a whole, the gross installed capacity of the Enel Américas Group reached 11,219 MW as of December 2017 and the consolidated electricity generation amounted to 41,053 GWh, while energy sales totaled 56,051 GWh. In the electricity industry, the business segmentation between hydro and thermal generation is natural, since the variable costs of generation are different for each method of electricity production. Thermal generation requires the purchase of fossil fuels and hydroelectric generation requires the water that comes from dams and rivers. 55% of our consolidated generation capacity comes from hydroelectric sources and 45% from thermal sources. Hence, the definition of the generation company’s commercial policy is relevant for the proper management of the business. Electricity Transmission The electricity transmission business for Enel Américas is mainly performed through the interconnection line between Argentina and Brazil, Enel Cien, subsidiary of Enel Brasil, whose transport capacity is 2,100 MW. Electricity Distribution The distribution business is conducted through Edesur in Argentina, Enel Distribución Río (former Ampla), Enel Distribución Ceará (former Coelce) and Enel Distribución Goiás (former Celg) owned by Enel Brasil in Brazil, Codensa in Colombia and Enel Distribución Perú (former Edelnor) in Peru. During 2017, our main distribution subsidiaries sold 74,337 GWh. Currently, Edesur, Enel Distribución Río, Enel Distribución Ceará, Enel Distribución Goiás, Codensa and Enel Distribución Perú serve the main cities in Latin America, providing electricity service to more than 17.2 million clients. 128 Annual Report Enel Américas 2017 Argentina Participations in installed capacity and in business Groups for 2017 are distributed as follows: Participation in installed capacity and in Business Groups in 2017 Electricity Generation Enel SADESA AES Regional Governments Pampa Energía Enel Américas S.A. participates indirectly in electricity Foninvemem generation through Enel Argentina S.A.’s subsidiaries Enel National Government Generación Costanera S.A. (Costanera), Enel Generación Others El Chocón S.A. (Chocón) and Central Dock Sud S.A. (CDS). 12.5% 10.8% 8.6% 7.9% 9.8% 6.4% 19.9% 24.1% Among the most relevant news of the year, worth is to Costanera, Chocón and CDS own together 4,537 MW of mention the biddings carried out by the new Government gross installed capacity. This capacity represented by the for the creation of new generation offer. To that effect, end of 2017, 12.5% of the total capacity in the Argentine SIN noteworthy is the Thermal Bidding performed under (National Interconnected System). Electricity generation Resolution 287/2017, which awarded 1,810 MW of new of these companies reached 14,829 GWh on December thermal generation of these technologies: a) closing of 31, 2017, equivalent to 10.9% of the total generation of combined cycle or b) cogeneration, with the commitment Argentina. to be available to satisfy the demand in the MEM, and the biddings performed under the Program RenovAr Round 2, Worth is to mention that, among the most important in order to create new generation capacity from Renewable business groups that participates in the Argentine Energies. In this program, the total capacity awarded is: Electricity Market in generation are: AES, SADESA through Round 2 of Program RenovAr 88 projects for 2,043 and PAMPA ENERGIA, company that in 2016 acquired MW in 18 provinces. The Program RenovAr is contained Petrobras Argentina. Other companies with participation in Law 27,191, which establishes a path of participation in in the generation business are YPF Energia, CAPEX and these types of energies in the market that for 2025 should Pluspetrol Energía, acquired by YPF. reach 25%. 129 Description of the electricity business by country Enel Generación Costanera S.A. As a result, the operations performed by the net generation of the Convectional Units of Costanera reached 1,460 GWh, and the net generation of Combined Cycles reached 6,398 GWh. Costanera is located in the city of Buenos Aires and has six steam turbine units totaling 1,131 MW, and can generate In January 2017, the Secretary of Electric Energy with natural gas or fuel oil. It also operates two combined depending on the Ministry of Energy and Mining updated cycles of 851 MW and 322 MW respectively; and its gross through Resolution N° 19/2017 the remuneration values of installed capacity is 2,304 MW. Resolution SE N° 22/2016 to be applied from February 2017. It should be recalled that on October 6, 2016, the Company’s The implementation of Resolution SEE N° 19/2017 triggered Extraordinary General Shareholders’ Meeting approved the an increase of remuneration of around 50% in relation amendment of Article 1st of the bylaws, where company to the previous regulation. Basically the remuneration name was modified from Sociedad de Central Costanera concepts were simplified. There is a capacity charge, which S.A. for “Enel Generación Costanera S.A.”, which is already varies in relation to technology and size of the unit, and a registered. variable charge. The values are defined in dollars. During 2017 CAMMESA performed the dispatch of SADI Since the sanction of Resolution SEE N°19/2017, it was according to the resolutions established by the Secretary established for thermal units the possibility to offer of Energy. In this context, the priority was the dispatch commitments of guaranteed availability, and additional of Turbo Steam units consuming fuel oil (FO) until mid guaranteed availability (DIGO and DIGO Additional April 2017. Later, the dispatch was maintained prioritizing respectively) with the same differential remuneration for natural gas (a mix of national gas, liquefied natural gas every technology. (LNG) and gas imported from Bolivia), taking into account the efficiency of the units and the use of liquids (gas oil In this sense, in 2017 Costanera participated in the Winter and fuel oil) in accordance to the restrictions imposed for Seasonal Programming (from May 1 to October 31, 2017) Usinas during the season of high residential demand. and the Summer Seasonal Programming (from November 1 to April 30, 2018) of the commitments of guaranteed availability. This mechanism has generated for the Company revenues for a total of ARS$ 1,160 million in the period May-December 2017. 130 Annual Report Enel Américas 2017The hydrological year starts on April 1, and has been characterized as dry accordingly the contribution of the hydrological basins of the Rivers Limay and Collón Cura. Net generation recorded for these power plants during the year was 2,027 GWh. This generation was produced by 1,497 GWh in El Chocón (74%), 411 GWh in Arroyito (20%) and 119 GWh by motogenerators (6%). The Company started 2017 with a level of the reservoir of 374.79 meters above sea level (m.a.s.l.). The reserve El Chocón dam was 1,807 GWh and in the Comahue it was 5,278 GWh. Both amounts were measured in relation the minimum height condition of FOE. At the end of year 2017, the level of the reservoir reached 377.62 m.a.s.l. The energy reserve of the Comahue dams were 5,915 GWh of which 2,156 GWh were reserves of El Chocón. In January 2017, the Secretary of Electric Energy, which is subordinate to the Ministry of Energy and Mining, through Resolution N° 19/2017 updated the remuneration values of Resolution SE N° 22/2016 to be applied from February 2017. The implementation of Resolution SEE N°19/2017 prompted a change in the remuneration of thermal and hydro generators in relation to the previous regulation. The remuneration concepts were simplified, thus considering a capacity charge, which varies in relation to technology and size of the unit, and a variable charge. The values are defined in dollars. Additionally, since this Resolution SEE N°19/2017, it was established for thermal units the possibility to offer commitments of guaranteed availability, and additional guaranteed availability (DIGO and DIGO Additional respectively) with the same differential remuneration for every technology. Starting from motogenerators, in 2017 Chocón participated in the Winter Seasonal Programming (from May 1 to October 31) and the Summer Seasonal Programming (from November 1 to April 30, 2018) of the commitments of guaranteed availability. This mechanism has generated for the Company revenues for a total of ARS$ 10.9 million in the period May-December 2017. 131 Enel Generación El Chocón S.A. Hidroeléctrica El Chocón SA is a hydroelectric generation company, which operates El Chocón and Arroyito power plants, located on River Limay. It’s located in the provinces of Neuquén and Río Negro. The hydroelectric complex has 1,328 MW total gross installed capacity and includes El Chocón plant, with 1,200MW installed capacity (artificial reservoir’s hydroelectric power plant) and Arroyito plant, with 128 MW installed capacity, both using the waters of Rivers Limay and Collón Curá for generation. The gross hydro installed capacity of the Company is 1,328 MW; thermal gross capacity is 35.6 MW and corresponds to motogenerators. Its participation in the SADI is 4% in relation to the total installed capacity. El Chocón is located in the Comahue region, consisting of the Argentinean provinces Río Negro, Neuquén and the southern areas of Buenos Aires provinces, over the Limay River, 80 km upstream from the confluence with Neuquén River. Arroyito is the compensator dam of El Chocón and is located in the same river, 25 km downstream. Description of the electricity business by country Dock Sud Power Plant and size of the unit, and a variable charge. The values are defined in dollars. Dock Sud power plants located in Avellaneda district, Buenos Aires. Dock Sud owns and operates a single Since Resolution SEE N°19/2017, it was established generation power plant with two units, with a total capacity for thermal units the possibility to offer commitments of 870 MW. Dock Sud power plant (CDS in Spanish of guaranteed availability, and additional guaranteed acronym) has four gas turbines and one steam turbine. Two availability (DIGO and DIGO Additional respectively) with of the gas turbines and the steam turbine comprises once the same differential remuneration for every technology. combined cycle power plant. The energy generated by Dock Sud in 2017 reached 4,944 Programming (from May 1 to October 31) and the Summer GWh, participating in 5.6% of thermal generation and Seasonal Programming (from November 1 to April 30, covering 3.7% of the SADI demand. 2018) of the commitments of guaranteed availability. To that effect, CDS participated in the Winter Seasonal On December 31, 2017, the installed capacity of Central Since 2015 there is a loan obtained from CAMMESA, Dock Sud S.A. represented 2.4% of the total installed whose purpose was to finance the costs related to the capacity in the SIN. combined cycle major maintenance. Pursuant to Article N°7 of Annex 2 of Resolution SEE 19/2017, in December In January 2017, the Secretary of Electric Energy, which 2017 the Company singed and Addenda to the existing is subordinated to the Ministry of Energy and Mining, mutual contract, where the payment method of the through Resolution N° 19/2017 updated the remuneration aforementioned loan was adjusted in relation to the values of Resolution SE N° 22/2016 to be applied from remuneration established in the previous regulation and February 2017. the use of credits of the Additional Remuneration of Trust (RAF in Spanish acronym). In this sense, the compensation The implementation of Resolution SEE N°19/2017 between the updated debt and the RAF credits was prompted a change in the remuneration of thermal and performed, thus the new capital balance was ARS$224.9 hydro generators in relation to the previous regulation. The million to be paid in 24 installments plus interests (at remuneration concepts were simplified, thus considering CAMMESA interest rates). The first installment was paid a capacity charge, which varies in relation to technology in December 2017. 132 Annual Report Enel Américas 2017Activities and projects in generation Projects Expression of interest for the development of infrastructure projects In the context of the changes in regulation that the Argentine government is performing and the variety of biddings that have been done, and new ones that the government plans to convene to carry out new investments in energy, the Company is analyzing the potential installation of a new combined cycle in Costanera. The intention is to compete for electricity energy contracts in those biddings that the Ministry of Energy and Mining might offer during the second semester of 2018, and where a process has been already opened in 2017 for the potential interested entities to present projects in this process. The project would consist on the installation of a combined cycle unit, with an installed capacity of 450 MW, connected to the voltage bars of 220 kV and 132 kV of the existing Costanera substation. The operation would work with two types of fuel (natural gas or diesel). Nevertheless, there’s a preference for natural gas and when it’s not available diesel would be used. The construction period is estimated in 30 months, depending on the technical specifications to be selected. Vuelta de Obligado Power Plant Project The Vuelta de Obligado S.A. (VOSA in its Brazilian acronym) project includes the installation of a combined cycle of nearly 800 MW of installed capacity, during 2017 the two gas turbines of 270 MW of capacity each one continued operating in simple cycle. The commissioning of every installation of the new power plant is planned for the fist quarter of 2018, and consists in two gas turbine combined cycle and one steam turbine. Once the combined cycle is put in motion, the devolution of the debt of CAMMESA with generation companies will start. These generation companies contributed to such project through a 10-year supply contract at a 30-day Libor rate plus 5%, pursuant to the Generators Agreement 2008- 2011. Land Reserved Projects for Future In Argentina, Enel Américas doesn’t have any land reserved for future projects. 133 Description of the electricity business by country Electricity Distribution Edesur responsibility of such entity. On February 1, 2017 the Integral Tariff Review came into force, thus ending the process of renegotiation of the concession contract, and reestablishing the full validity of the Concession Contract, the Tariff Regime and the Quality of Service, which were renegotiated base don the Edesur’s main purpose is the distribution and principles established by Law 24,065. commercialization of electricity in the southern area of Buenos Aires. This includes two-thirds parts of the city of This milestone is critical for the company, because it Buenos Aires’ area and twelve districts of Buenos Aires means the complete restoration of conditions of certainty province, covering 3,309 km2, for a period of 95 years and sustainability of the business, and also defines starting from August 31, 1992. conditions and basic criteria (formation of capital base and calculation of WACC) for future tariff revisions throughout This period includes an initial one of 15 years and eight the concession period. additional periods of 10 years each. On February 5, 2007, the National Electricity Regulatory Entity (ENRE) resolved Its worth mentioning that along the tariff cycle of the RTI to extend the initial period for five additional years, from term, established between February 1, 2017 and January the completion of the Integral Tariff Review (RTI) process. 31, 2022, the quality of service regime will increase its requirements according to the expectation of the Later, on January 27, 2016, the Resolution MINEM N° development of investments and operational improvements 7/2016 was enacted, which instructed ENRE, among other that EDESUR proposed in the context of RTI. Therefore, things, to: perform an adjustment to the VAD in the tariff the quality guidelines will be more demanding and the charts of the Company, on behalf of the RTI (Integral Fees cost of energy not delivered will increase throughout the Renegotiation) and the framework of the Transitory Tariff period, reaching the values established recently in the last Regime established in the Agreement Act and to carry our semester of the cycle. every act needed to proceed the RTI, which should come into force before December 31, 2016. The process and The concession contract establishes for Edesur the schedule for the RTI was established through Resolution obligation to supply energy according to the demand ENRE 55 as of April 5, 2016. of the owners or inhabitants of the properties within its Within the framework of the RTI process, on October with certain quality standards related to the electricity 28, 2016 the public hearing was held to inform and hear supplied, to comply with operational requirements the opinions with regards to the tariffs proposals that the concerning the maintenance of distribution assets and to distribution companies Edesur and Edenor presented to bill clients on the basis of actual measurements. concession area, it also demands the company to comply the ENRE according to Resolution ENRE N° 55/2016. In December 2017 the Ministry of Energy and Mining On December 30, 2016, the ENRE enacted Resolution (MINEM) presented its proposal and criteria for the N° 626, approving the document denominated Final treatment of regulatory liabilities. The first measure was, Public Hearing Resolution with the purpose to inform through the Note issued on December 30, 2017, that the and answer the opinions made in relation to the Tariffs Ministry informed that CAMMESA took possession of Proposal presented previously by the companies with the debt registered by EDESUR with this company for regards to the definition of tariffs to be applied, and to the purchase of energy, for a period of 90 days pending transfer the considerations of the Subsecretary of Tariffs to formalize the aforementioned agreement. EDESUR is Policy Coordination of the Ministry of Energy and Mining of working on the latter to comply with the agreed deadlines. the Nation, those subjects planned that are not under the 134 Annual Report Enel Américas 2017 At the same time and with the purpose of regain the normal structural conditions, the National Argentinean Stage 2 Government decided not to extend the validity of the Electricity Emergency Law (in effect until December 31, > Commissioning of a new MT feeder in Pompeya and a 2017) and the Economic Emergency Law (in effect until line of 3 new feeders in Patricios and six support links. January 6, 2018). > Transfer of feeders from old sections 3 and 4 to the new sections 3 and 4. In 2017 Edesur delivered electricity power service to > These works improve the energy supply in San Cristóbal 2,529,307 clients, representing 0.99% growth in relation –Parque Patricios –Constitución – Boedo neighborhoods. to the previous year. Of the total, 87.9% are residential customers, 10.8% commercial customers, 0.9% industrial The works of both stages represented materially the wiring customers and 0.4% other users (institutional). Energy of 13,950 mt of CSMT (240 m of 3x1x400 Al and 13.710 sales reached 17,736 GWh, including the distribution m of 3x1x185 Al) and the renovation of 12 transformation services (tolls) to large users, at similar levels than the centers. previous year. Sales distribution was: 43.6% residential sector, 25.4% commercial sector, 7.5% industrial sector Additionally, the substation was prepared to supply of Villa and 23.3% others (4.3% institutional, 2.9% public lighting Olímpica, Parque Olímpico and the neighborhoods Procrear and 16.1% tolls). (Saenz station) at an estimated capacity of 17 MW. Expansion of Padre Novak This work consisted in the installation of four new feeders from the SE Padre Novak. Also 13 km of medium tension network new wiring were installed, benefitting users mainly from the villages of San Juan, Villa Vatteone, Gobernador Costa and Santa Rosa (Florencio Varela). Discharge of SE Temperley with SE Calzada This project consisted in the installation of two new feeders from the SE Calzada. New wirings of 15 km of medium tension network were made, with the purpose of discharging feeders of the SE Temperley and thus benefit users from the villages of Adrogué and Temperley, Almirante Brown and Lomas de Zamora respectively. In 2017 the annual mobile loss rate (technical and non technical) reached 12.04%, meaning an improvement in relation to 2016 (12.44%). This result is achieved in a scenario of negative variation of demand. Activities and projects in distribution Expansion of SE Pompeya These works were carried out in two stages: Stage 1 > Commissioning of three MT new feeders and two new support links. > Transfer of feeders from old sections 1 and 2 to the new sections 1 and 2. > These works impact the improvement of energy supply in Nueva Pompeya–Barracas–Parque Patricios neighborhoods. 135 Description of the electricity business by country New Feeders SE Mobile Roca This project is the second stage of the SE Móvil Roca and included the wiring of two new feeders from that substation. New wiring for 4.5 km of medium tension network were made to discharge the feeders of the SE Temperley, benefitting users from the villages of Temperley and Santa Catalina, starting from Lomas de Zamora. Technological improvement of the network Shaft Chambers This project comprises the installation of underground MT/BT Transformation Centers in areas where the grid is evaluated as vulnerable. In 2017, 20 new chambers were installed in the City of Buenos Aires distributed in the following neighborhoods: Caballito, Villa Santa Rita, Villa General Mitre, Villa Crespo, Villa Devoto, Flores, Floresta, Mataderos, Villa Luro, Barracas, La Boca, Nueva Pompeya, Parque Avellaneda and Villa Soldati. Digitization of the network In order to improve the quality of service, Edesur begun The MT feeders under worse SAIDI conditions were the installation of the first smart meters to digitize its chosen. The objective was to minimize the interruption network. The pilot project included the installation of 5,000 periods when facing a failure of any feeder, transferring equipment in the concession area during 2017. the charges to the backup feeder in a telecommanded way. During 2017, 100 equipment were assembled with own The new smart meters include the technology that Enel employees, of which 83 are operating and it’s estimated to is using worldwide, which has many advantages: the greatly increase this number in the following years. consumption reading is done remotely and more precisely; network failures are identified in real time, therefore repair times would be much shorter; and allows the user to read consumption data constantly, while leading to a more efficient energy consumption. 136 Annual Report Enel Américas 2017 Brazil Electricity Generation Volta Grande Enel Américas through its subsidiary Enel Brasil acquired the rights to operate for a 30-year period Volta Grande hydroelectric power plant, which is located in the Rio Grande, between the Brazilian states São Paulo and Minas Gerais. The total cost of the concession was BRL$1,420 million (approximately US$420 Enel Américas participates in electricity generation through million). Enel Brasil and its subsidiaries Enel Green Power Cachoeira, Volta Grande and Enel Generación Fortaleza. Enel Brasil won the auction for hydroelectric concessions These three power plants, two hydroelectric and the other in an open public session at the São Paulo Stock Exchange. The thermal, add up 1,354 MW total net capacity, representing operation of the asset began on November 11, 2017. performed by the Brazilian government on September 27, 2017, 0.88% of the capacity of Brazilian SIN. In Brazil, electricity generation of the Group reached 4,034 debt and 40% with equity. Initially a two-year bridge loan (2018- GWh, reaching 0.7% of the total generation in the country 2019) was considered, under the guarantee of Enel. During the (thermal and hydro), where hydroelectric production bridge loan term, a long-term financing would structure. The acquisition of this concession was financed 60% with represented 52% of the total generation of the Enel Américas Group in Brazil. The proportional net generation of Enel operation in 2017 was Other generators connected to the Brazilian SIN are: CHESF, Furnas, Cemig, Electronorte, Cesp, Copel, Eletrobras and With this acquisition, Enel Brasil increased in 40% its Eletropaulo. hydroelectric capacity in Brazil, adding 380 MW to its portfolio. 137 GWh, and also the sales. Enel Green Power Cachoeira Dourada Cachoeira is located in the State of Goias, 240 km south of Goiânia. The power plant owns ten units with 665 MW of net installed capacity. It’s a run-of-the-river power plant and uses the waters of River Paranaiba. Enel Generación Fortaleza Fortaleza is located in Caucaia municipality, 50 km from the capital of Ceará state. Fortaleza is a 319 MW combined cycle thermal power plant that uses natural gas; and is able generate one third of the electricity needs of Ceará, state that has a population of nearly 9 million inhabitants. Net generation in 2017 reached 1,965 GWh, and sales amounted to 9,526 GWh. Fortaleza was built in a 70 thousand square meters area, and is part of the infrastructure of the Industrial and Port Complex of Pecém, in Caucaia municipality, and is part of the Thermoelectricity Priority Program (PPT) of the Federal Government. Fortaleza has a strategic location to boost regional growth and to facilitate the setup of other industries. Its main customers are Coelce and Petrobras. Electricity generation in 2017 was 1,932 GWh, while sales reached 2,923 GWh. 137 Description of the electricity business by country Land reserved for future projects Enel Brasil owns an area of 75 hectares in the city of Macaé, State of Rio de Janeiro, reserved for a new thermoelectric project. Electricity Transmission Enel Américas Group also participates in the transmission and sale of electricity in Brazil through the interconnection line between Argentina and Brazil, through the Enel Cien, holding 99.3% ownership. Enel Cien Electricity Distribution in Brazil Enel Cien is an energy transmission company in Brazil. The complex consists of two frequency conversion stations, Garabi I and II Garabi II, converting both ways the frequencies of Brazil (60 Hertz) and Argentina (50 Hertz) and transmission lines. On the Argentinean side, they are managed by two subsidiaries: Compañía de Transmission del Mercosur S.A. (CTM) and Transportadora de Energía S.A. (TESA). CIEN has control of 100.0% of the capital in both companies. The interconnection system consists of two transmission lines with a total length of 1,006 km, and the Garabi Conversion Station, SE STA (Santo Angelo/RS) and SE YTA (Itá/SC). Enel Américas participates in distribution through Enel Brasil and its subsidiaries Enel Distribución Rio, Enel Distribución Ceará and Enel Distribución Goiás. Enel Américas owns directly and indirectly economic ownership of 99.4%, 73.7% and 99.5% of these companies property, respectively. In Brazil, main distribution companies in the electricity system are: CPFL, Brasiliana de Energía, AES Elpa, Cemig, Light, Coelba and Copel. Enel Distribución Rio On April 5, 2011 the decrees were published in the Enel Distribución Río (former Ampla) is an energy Official Gazette defining the annual value of the Allowed distribution company with operations in 73% of the Annual Remuneration (RAP) for Enel Cien. With this, the territory of the State of Río de Janeiro, which is equivalent regulator equates Enel Cien (the assets of which consist of to a 32,188 km2 area. The population is approximately 8 Garabi 1 and 2 lines) to concessionaires of public service million inhabitants, distributed in 66 municipalities, and transmission. Total annual RAP is adjusted annually and the the following are the most important ones: Niteroi, São tariff review processes will be conducted every four years. Gonçalo, Petrópolis, Campos and Cabo Frío.. Starting from April 2011, therefore, Enel Cien was officially authorized to receive payments under this new business During 2017, Enel Distribución Río provided electricity to approach. 3,029,751 clients, 2,664,076 of which are with supply and 138 Annual Report Enel Américas 2017365,675 without supply, 1% less than 2016 mainly due to During 2017, Enel Distribución Ceará (former Coelce) the disablement of clients without supply. Out of the total, supplied energy to 4,016,546 clients, a 3.3% increase 80% are residential clients, 5% are commercial clients in relation to 2016. Out of the total, 67% are residential and, 15% other users. clients, 4% commercial customers and 29% other users, being rural clients the most representative. Energy sales in 2017 reached 11,041 GWh, representing a 0.8% decrease in relation to 2016, and the participation of Energy sales in 2017 were 11,522 GWh, showing a residential clients was 42% of physical sales, followed by reduction of 0.9% over 2016. In these sales, residential 17% of sales to commercial customers, industrial clients clients represented 37%, commercial clients were 17%, represented 3% and other clients and tolls represented and tolls and other clients were 46%. 38% of sales. Enel Distribución Río greatly emphasizes energy theft fight, developing projects for the use of technology and social activities. Enel Distribución Goiás Nevertheless, currently energy losses still represent one of the main challenges of Enel Distribución Río. The year 2017 ended with 20.35% of energy losses, and compared with 2016 experienced a 0.95 % growth mainly due to the increase of risky areas. Enel Américas through its subsidiary Enel Brasil acquired 94.8% of Enel Distribución Goiás (former Celg) share capital, a distribution company that operates in the Brazilian State of Goiás. The amount of the investment reached BRL$ 2,187 million (approximately US$ 640 million). Additionally, in 2017 Enel Distribución Río also took actions to improve quality indicators, reducing the SAIDI (period of time without energy supply) in 18% in relation to 2016 (18.21h vs. 22.29h). Enel Distribución Ceará Enel Brasil was awarded with the public tender for the privatization of Celg, which carried out by the Brazilian government in November 2016 through Banco Nacional de Desarrollo BNDES, and started operating the asset on February 14, 2017. In May 2017, Enel Brasil acquired an additional 5% of Celg capital (currently Enel Distribución Goiás) for BRL$ 81.7 million. Additionally, Enel Brasil performed a capital increase in Enel Distribución Goiás for Enel Distribución Ceará is the electricity distribution a total amount of BRL$1,600 million. By the end of 2017, company that operates the State of Ceará, in northeastern the participation of Enel Brasil in the share capital of Enel Brazil, which covers a 148,921 km2 concession area. The Distribución Goiás reached 99.93%. company serves a population of over 9 million inhabitants. 139 Description of the electricity business by country The acquisition of Enel Distribución Goiás was completely financed with funds from the capital increase of Enel Américas, which was approved by the end of 2012. The company is located in the central-west area of Brazil, its concession area amounts to 337 thousand km2 and serves a population of more than 6 million inhabitants. Energy sales were 12,264 GWh in 2017, increasing 3.7% over 2016. The distribution is the following: 34% residential clients, 16% commercial clients and 50% tolls and others (please consider that Enel Brasil started to consolidate Enel Distribución Goiás in February 2017). The number of clients at the close of 2017 grew to 2,928,176, meaning a 2.4% variation compared to the close of 2016. The classification by type of clients shows that 81% are residential, 7% are commercial clients, and other clients represent el 12% (please consider that Enel Brasil started to consolidate Enel Distribución Goiás in February 2017). Activities and projects in distribution Energy Efficiency Energy efficiency projects comprise actions to promote the conscious energy consumption and changes of equipment (refrigerators, freezers, lamps) and electrical wiring, with an important impact on energy consumption and home energy efficiency improvement. In 2017, 169,755 people in Enel Distribución Río, Enel Distribución Ceará and Enel 140 Distribución Goiás benefited with the change of equipment initiatives. Also, 108,003 consumers were benefited from the educational projects for conscious consumption (56,449 in conferences and workshops, 44,024 by community agents and 7,530 by the school program). The projects are supported by touring trucks equipped with an explanatory model of energy generation, transmission and distribution processes, simulators of consumption and interactive totems with fun units for all ages. The displacement of the project guarantees the access to information for residents and students in zones far from metropolitan areas. In 2017 the energy efficiency program of Enel Brasil concentrated its initiatives in the regions with greater impact in commercial losses (electricity theft), thus promoting responsible energy consumption initiatives in the population, especially among low-income consumers. The resources invested by distribution companies are regulated and are equivalent to 0.5% of the companies’ net operational revenues. Annual Report Enel Américas 2017 Colombia Electricity Generation Enel Américas participates in electricity generation through its subsidiary Emgesa, where it controls, directly and indirectly, 48.5% of its property (economic participation) and 56.7% of political participation. Electricity generation of Enel Américas in Colombia reached 22% of the total generation in this market in 2017. Other generators connected to the Colombian electricity system are: Empresa Pública de Medellín, Isagen, Gecelca, Celsia and Chivor. Emgesa the largest hydroelectric power plant in the country. Out of the 14 existing plants, 12 power plants are hydroelectric and two are thermal. Net generation was 14,765 GWh in 2017. Hydro generation reached 14,593 GWh and thermal generation was 172 GWh. Sales through the energy exchange reached 2,455 GWh. Hydrologic Context for Emgesa in 2017 The offer of electric energy in Colombia in 2017, presented ENSO conditions (Oscillation of El Niño South, for its English abbreviation) relatively neutral, without any incidence in the hydrologic contributions of the main rivers in Colombia. During the first half of 2017 the contributions at a national level (SIN) registered a surplus and in the second half a deficit, the latter also with records below historical average. The deficit was caused by the presence of atmospheric phenomena that restrained rains during the On September 1st, 2007, the Colombian companies Emgesa second rainy season (October and November). S.A. E.S.P. and Central Hidroeléctrica de Betania S.A. E.S.P. completed a merger process, leaving the latter as the Hydrological contributions of Bogotá and Quimbo river absorbing company, which changed its name to Emgesa S.A. basins were above historical average, while Betania river E.S.P. basin was normal and Guavio shown deficit in hydro Emgesa is the largest electricity generation company contribution. in Colombia, and is located near the city of Bogotá. The Thereby, the average Exchange price of the year was 106.1 company is comprised by 14 power plants with 3,509 COP$/kWh, 64% lower in relation to 2016. In this context, MW of total installed capacity, among which El Guavio in 2017 the variable margin of Emgesa was COP $2,255 is significant, with 1,263 MW of installed capacity, being billion, showing a 2.9% increase from 2016. 141 Description of the electricity business by country Effective Maintenance Management of Generation Power Plants and Production Management Milestones in 2017 In 2017 net energy generation was 14,765 GWh, showing a 1.3% decrease over 2016. This mainly is the result of the higher hydrologic contribution in 2017 in relation to 2016. In the first semester of 2016, the National Colombian Interconnected System –SIN– suffered the consequences of El Niño weather phenomena; therefore in 2017 thermal power plants weren’t required by the system. This year the hydro power plant El Quimbo reached its higher annual generation of 2,191 GWh since it’s commissioning in 2015. The adequate planning and execution of preventive and corrective maintenances guaranteed that the availability index of the generating park in 2017 grew by 1.2% compared to 2016, reaching 92.6%. An important noteworthy that were signed for one to three-year term. Total sales reached 72.9 Mm3 and the variable margin was COL$ 3,420.22 million, meaning a contribution of 0,15% to the Company. The market with the greater growth was the non-regulated industrial market, which grew 191% in relation to 2016. Nevertheless, total sales decreased due to the reduction of spot sales and wellhead for the thermal sector, explained by the El Niño phenomena in 2016. The supply was delivered to 10 industrial clients (non regulated) in Bogotá, Manizales and Cartagena, and 6 wellhead clients (secondary market). The long-term supply of gas was ensured until 2023 in the fields of Cusiana-Cupiagua and Clarinete 1. Land reserved for future projects maintenance issue of the period was the complete In Colombia, Enel Américas doesn’t own any land reserved dismantling of unit 5 of El Guavio hydro power plant for the for future projects. maintenance over the stator winding and general overhaul, since its start of operations 25 years ago. Likewise in the thermal power plants the overhaul of units 4 and 5 of Termozipa, and Cartagena 1, were completed, with the purpose of ensuring the availability of the units. Some of the modernization project of power plants that will continue in 2018 are the following: change of stator winding of units 1 of Paraíso and Guaca, modernization of the speed regulators of unit 1 of Betania hydro power plant, of units 1 and 2 of Paraíso and of unit 3 of Guaca. In the thermal power plant Termozipa, the service of the recollection system of dry ashes of every unit operating simultaneously to guarantee its environmental management was activated. Gas Commercialization Activities and projects in generation Improvements in Termozipa Thermal Power Plant Termozipa is a thermal power plant owned by Emgesa located 40 km from Bogotá. This power plant has four units and its total installed capacity amounts to 236 MW and the coal supply comes from coal mines located in the nearby areas. Among other things, the improvements project comprises, among others, interventions in boilers, In 2017 the Company continued its process of consolidation turbines, generators and water outlets. This will allow of the natural gas market in Colombia, obtaining the the increase of the useful life in additional 15 years or entrance of two new industrial clients, one in Cartagena 100,000 hours of operations. In addition, the specific heat and the other in Mosquera (opening a new market in rates will improve (a measure of the energy power plant Cundinamarca). Both started consuming in December 2017. efficiency) and will reduce the unavailability of energy. The Company continued supplying two industrial clients These improvements seeks to achieve high environmental whose contracts expired in November 2017, agreements standards with regards to gas emissions of thermal coal 142 Annual Report Enel Américas 2017 > Redesign and reposition of Medium tension networks. > Normalization of High Tension networks. > Modernization of essential services in AT/MT substations > Forestry Management > Actions plan to control and/ or mitigate the impact of the rain and wind season. > Protections management. > Modernization of communications’ substation. The results described above, show the vision of Codensa to manage the network in order to achieve world-class standards in terms of quality of service, under scenarios of higher investments and operations, also implementing Telecontrol to our network thus reaching very satisfactory quality of service indicators for our clients. Additionally, and continuing with the program of market discipline, worth is mentioning the implementation of plans focused on the control of electricity theft, thus achieving energy losses index of 7.84% in 2017. Electricity energy demand in the area that Codensa serves showed a TAM decrease of 0.94%. During 2017 energy sales were 13,790 GWh, 36% of which were sales to residential clients, 18% commercial clients, 34% tolls and 12% industrial clients and others. As of December 31, 2017 Codensa has installed 42,485 smart meters in the framework of the Smart Measure Project. power plants in Latin America, mainly focused on: Nitrogen Oxide (NOx) emissions below 330 mg/Nm3; Sulfur Dioxide (SO2) below 400 mg/Nm3 and particulate matter emissions below 35 mg/Nm3. Th interventions began by the end of 2016 and are expected to be completed in 2022, including the environmental improvements whose objective is to reach a new emissions regime in every generation unit. Electricity Distribution Codensa Codensa is the electricity distribution and commercialization Likewise, in relation to Public Lighting, the modernization company of Enel Américas in Colombia, serving the project for the Public Lighting of Bogotá continued, which complete market of Bogotá and Cundinamarca, as well as until 2017 comprised the installation of 20,000 lights with the thirteen districts of the neighboring Departments of LED technology over a total of 33,000 lights considered Meta, Tolima and Boyacá. for the whole project. Moreover, by the end of 2017, the Company modernized 220,000 lights with Electronic By the end of 2017, the Company served 3,340,457 clients, Ballast technology in different areas of the city. and obtained important achievements and developments in activities addressed to improve the Quality of Service, Worth is mentioning that during 2017, Codensa continued whose result was the improvement in the average with the implementation of the Smart City Project in the frequency of interruptions of our clients’ service (9.96 northwestern area of Bogotá, which will continue until times of SAIFI -System Average Interruption Frequency 2019. Likewise, the feasibility analysis and the design of Index-) and in the duration of the interruptions (820.37 Min Works needed to develop the Electric Subway (elevated) of SAIDI -System Average Interruption Duration Index-). in Bogotá, supporting the Capital District in the concept of The work fronts were focused on: to implement solutions geared towards energy efficiency > Telecontrol Project of the Network and the development of new services to citizens. sustainable urban development and seize the opportunity 143 Description of the electricity business by country Peru Electricity Generation Enel Generación Perú S.A.A. Enel Generación Perú commercializes capacity and electric energy in the Peruvian market, complying with all the specifications of the Technical Norm for the Quality of Electric Services, being tension levels, frequency and the periods of unavailability of the service the most important ones. Enel Américas S.A. controls 100% of Enel Perú S.A.C. share capital, and through the latter holds directly 83.60% Total effective capacity amounted to 1,596 MW, (13.34% of Enel Generación Perú and 96.5% of Enel Generación of the total capacity of the National Electric Interconnected Piura share capital. System– henceforth “SEIN”), where 44% was hydro generation and 56% thermal generation, considering In Peru, the others generators connected to the electricity Yanango (43 MW) and Chimay (155 MW) power plants, system are: Electroperú, Engie Energía Perú and Kallpa which since May 31, 2009 split off and became part of Generación. Chinango S.A.C. Enel Perú S.A.C. Enel Perú S.A.C. is a company constituted in Peru. Its social purpose is to perform investments in other companies, mainly in those dedicated to the exploitation of natural resources, and specially those related to generation, operation and commercialization of electric energy; develop engineering for the construction of energy power plants; carry out activities for the supply, assembly and commissioning of equipment, facilities and/ or services for the generation of electrical energy. Additionally, the company may perform any other activity related to the energy sector and waters. Enel Generación Perú equity participation as od December 31, 2017 was the following: 83.6% belongs to Enel Perú S.A.C. (of which Enel Américas owns 100% shareholding), Prima AFP S.A. owns 5.9% shareholding and other shareholders the remaining 10.5%. The Company owns seven hydroelectric power plants, five are located in Lima and two in Junín. Worth is mentioning that Callahuanca hydro power plant is under reconstruction and out of commercial operation since June 15, due to the damages caused by the floodings that happened in March caused by “El Niño Costero” phenomena. 144 Annual Report Enel Américas 2017The hydroelectric power plants in Lima are located in the The generation of Enel Generación Perú reached 6,883 Rímac River basin. Huinco Power Plant is located in Santa GWh in 2017, 14.3% less than 2016. Energy sales totaled Eulalia River basin, a tributary of Rímac River. Its installed 9,817 GWh as of December 2017, representing an 8.0% capacity amounts to 268 MW and Matucana Power Plant increase in relation to the previous year. is located in Rímac River basin, whose installed capacity . is 137 MW. These rivers are diverted through tunnels and channels to the town of Barba Blanca, where Callahuanca La producción en Enel Generación Perú alcanzó los Power Plant is located, whose installed capacity is 84 MW. 6.883 GWh en 2017, un 14,3% menos que el año 2016. Las The power plants Moyopampa (69 MW) and Huampaní ventas de energía totalizaron 9.817 GWh a diciembre de (31 MW) are located downstream. The total capacity of 2017, un aumento de 8,0% con respecto al mismo periodo these five power plants is 505 MW (without considering del año anterior. Callahuanca). Also the Company owns 21 lagoons with installed capacity of 282,35 hm3, which allows the regulation of the flow for energy generation and for the water supply to the city of Lima. The two hydroelectric Yanango power plants are located in the department of Junín. The installed capacity of Yanango is 43 MW, which uses the flows of Tarma River; and Chimay, with 155 MW installed capacity, which uses the flows of Tulumayo River. Their total installed capacity amounts to 198 MW. These two power plants became part of the subsidiary Chinango, as a consequence or a simple corporate reorganization process. Likewise, Enel Generación Perú owns two thermal power plants, Santa Rosa and Ventanilla, whose installed capacity is 414 MW and 479 MW, respectively. The first is located in the Cercado de Lima, and is comprised by UTI units with 105 MW, TG7 of 122 MW and TG8 of 187 MW. The second power plant is located in the Callao province, and comprises three generation units: two gas turbines and one steam turbine that constitute a combined cycle. Ventanilla Thermal power plant was the first combined cycle installed in the SEIN and currently is one of the four combined cycles of the system. Thermal power plants use natural gas from Camisea as their main fuel, and the alternative fuel is diesel 2. Enel Generación Piura S.A. The power plant is located in the city of Talara, in the northeast of Peru, and the administrative area operates in Lima. Its operations are carried out within the concession area, and according to the current legislation that allows the development of every civil, industrial, commercial and any other and operations related or unrelated to the main purpose. Generation plants are: > Malacas Power Plant: Comprises one Siemens unit, model SGT-800, named TG6, and was installed replacing the Mitsubishi TG1, TG2 and TG3 units, whose commercial operations were terminated between 2010 and 2014. On February 25, 2017 the Coes Sinac approve the start of commercial operation of the new unit with a total initial installed capacity of 35 MW (due to the limitation of power wires in 13.2 kV) and later on May 7, 2017 with an effective capacity of 51.28 MW, after the approval of the tests of Effective Power and Efficiency performed on March 24, 2017 > Malacas 2 Power Plant: Comprises one ABB unit, named TGN-4, operates with natural gas in open cycle, and with or without water injection. Nevertheless, since October 7, 2017, operated in the water injection mode only in order to reduce NOx emissions. > Malacas 3 Power Pant: Comprises one singe Siemens unit, named TG-5, operates with diesel B5 fuel in open cycle in condition of cold reserve. Worth is mentioning that, since May 27, 2017, the Coes Sinac approved its commercial operation with 130 MW “natural gas mode” additionally to its operation with diesel fuel. 145 Description of the electricity business by country Production Centers Power Plant Unit TG-6 Malacas TGN4 Malacas 2 Malacas 3 TG-5 RF Total Manufac- turer SIEMENS ABB SIEMENS Declared Fuel Natural Gas Natural Gas Diesel B5 Effective Capacity (MW) 51* 106 ** 190*** 295 * Effective from May 7, 2017. ** Effective from July 20, 2017. *** Effective capacity contracted with diesel, measured in the SE Talara 220 kV, effective from May 18, 2016. Additionally, from May 27, 2017 the operation in gas mode of 130 MW was approved. The generation of Enel Generación Piura reached 547 GWh in 2017, 18.3% less than 2016. Energy sales totaled 640 GWh in December 2017, a 9.7% reduction in relation to the same period in the previous year. Land reserved for future projects Activities and projects in generation Duality TG5 C.T. Malacas Project TG5 is a cold reserve unit that operates with biodiesel B5. The project takes the opportunity of using natural gas of unit TG4 when it’s under maintenance for several days, which was the case of the major maintenance C5 (32kEOH) programmed for 50 days. In that period, the unit TG5 operated to comply with the required dispatch for the national interconnected system. The project included the provision of gas compressor and its respective station ERM, and the costs associated to engineering. New unit TG6 C.T. Malacas Project Enel Generación Perú owns two lots with the purpose of being used for thermal generation projects, the first is In June 2016 started the assembly operations of the main located in the south coast of Peru and its total area is 203 components of the new unit TG6 over its platform in its hectares and the second is located in the central coast definite location. These works were possible thanks to the with a total area of 10 hectares. coordinated effort of specialists from different locations of the company. Nearly 50 people were involved in this project, considering own employees and contractors. 146 Annual Report Enel Américas 2017 Unit TG6 is a dual unit, its main fuel is natural gas, which south area of Lima. The distribution company distributes provides greater flexibility to its operation. Likewise, it energy to 1,396,966 clients, and benefits more than half counts with a system called chiller, which allows the of the inhabitants of Metropolitan Lima. At the end of 2017, optimization of its production. It is known that gas turbines the total accrued energy losses index was 8.2% are very susceptible to ambient temperature changes, and this system allows the maintenance of capacity if ambient As of December 31, 2017, Enel Distribución Perú had temperature increases. 1,396,966 clients, representing a 2.2% increase over 2016. Physical sales and tolls for 2017 were 7,934 GWh, 2.0% higher than the previous year. In monetary terms, sales reached PEN$ 2,690 million, meaning a 1.86% decrease Electricity Distribution over the previous year. Enel Américas S.A., through Enel Perú S.A.C., owns 83.18% of Enel Distribución Perú share capital. In Peru, other distribution companies that participate in the electricity system are: Luz del Sur, Electrosur and Grupo Distriluz. Enel Distribución Perú S.A.A. Enel Distribución Perú is the concessionary company for electric utility that covers the north area of Metropolitan Lima, in the Callao province and in Huaura, Huaral, Barranca and Oyón provinces. The concession area covers a total of 1,517 km2. The Company serves exclusively 52 districts and shares five additional districts with the distribution company in the Activities and projects in distribution In 2017, Enel Distribución Perú made investments for a total of 405.4 million soles. Main investments were: > Capacity expansion of the transformation substations (SET), and transmission lines including works for the SET Comas, Filadelfia and Malvinas. > Expansion and reinforcement of medium and low voltage networks. > Capacity expansion of medium and low-tension feeders. > Attention/ electrification of new projects for the expansion of the grid in human settlements. > Provision of greater safety in the facilities. > Improvements in public lighting facilities. > Investments in commercial losses reduction. 147 Description of the electricity business by country 17Sustainability 148 Annual Report Enel Américas 2017149 Letter from the ChairmanSustainable Business Model The Enel Américas’ sustainability model considers the Its important to highlight that in Brazil, in February 2017 integration of sustainability in the value chain of the the Company obtained control of Enel Distribución Goiás, Company as an essential principle of the business. the second electricity distribution company in Brazil, which supplies energy to the State of Goias with three million The sustainability plan of 2017 is focused on five pillars clients, and where the network and their systems are being that represent the cornerstones of sustainable integrated automatized, and also digitization is being incorporated as a development: occupational health and safety, solid tool to improve services and coverage. corporate governance, environmental sustainability, sustainable suppliers chain and the generation of The Company has focused its sustainability management economic and financial value. The goals for 2017 have in the inclusion and transparent cooperation with its been mainly oriented to develop strong relationships with stakeholders. Enel Américas is working in the criteria the community, the implementation of plans focused on and principles to promote fair relationships, in which the people that work for the Company, especially in the stakeholders are involved since the design of the project, topics related to diversity and inclusion, aim for operational ensuring the symmetry in the dialogue stages and the efficiency, innovation and a energy matrix that integrates access to the information required for decision-making environmentally sustainable technologies. process. This is carried out through the identification of the most relevant stakeholders involved in each of the Investment in digitization is a key issue for business operations, and assessing the possible areas of impact and sustainability, especially in relation to the operational possible opportunities. efficiency improvement of generation power plants and to boost service offer to our clients, which we have always Local needs are directly related to the goals of the Company considered to be the proactive actors of the business. through the execution of materiality matrixes specific for each As such, during 2017 we focused on the improvement territory, with the purpose of generating suitable projects and of clients’ services tools through the implementation initiatives to reach the objectives and shared priorities. of virtual offices in Argentina, Brazil, Colombia and Peru with the purpose of enabling customer approach and The strong geographical presence of the company enables the improvement of coverage and opportunities of our it to be permanently aware of stakeholders’ requests services. in order to align the solutions in a consensual manner, thus generating value for both parties. The inclusion of In Argentina, in August 2017 the Module SFDC Emergencies stakeholders has promoted the development of solutions was implemented, which enables the priority treatment in based on circular economy, for example in Argentina the critical cases facing energy service interruption such as the implementation of the “A Second Chance” Program, electro-dependent clients. In Brazil micro solar generation in which wooden coils that contain wires used for the power plants were distributed and at the same time lamps operation and maintenance of distribution networks and air conditioning were exchanged to electro-dependent were reused, and also the wooden pallets used for the clients in order to ensure energy supply and also to help transportation of heavy electric equipment are recycled. those clients to reduce their electricity bills. 150 Annual Report Enel Américas 2017Through a cooperation agreement with the NGO Vivienda called Facilitation to Enterprises, a methodology created by Digna Foundation, the dining room of the School Nº85 of Ernesto Sirolli, which currently provides accompaniment Ezpeleta of the Municipality of Quilmes (Buenos Aires) to more than 250 people, fostering entrepreneurship and was furnished with a total of 29 desks and 21 wooden the creation of businesses in the region. During 2017 tables made with the coils and pallets, benefiting directly a total of 178 businesses were created, 16 of which are the 280 students that daily have lunch in the school dining already financially sustainable and are generating revenues room. In Brazil, low-income communities received support and jobs. Among these businesses, noteworthy are the through recycling projects for entrepreneurs, with the following: production and sale of arepas, sound effects transformation of waste materials creating formal jobs that for events, fabrication of backpacks and accessories, increase the household income. In Peru, the floodings that production and commercialization of pastries, accounting took place at the beginning of 2017 caused by the “El Niño consultancies, and the development of two new thematic Costero” phenomenon, destroyed houses, large farming restaurants in the region. areas and irrigation infrastructure. Given this situation, the initiative Enel for Perú was born, which is a solidarity It’s worth mentioning the acquisition of Volta Grande, and voluntary activity of every Enel employee worldwide hydroelectric generation company with which the and Enel Cuore, which contributed economically for the renewable energy generation of Enel in Brazil will increase recovery of Callahuanca district through the development in 42%. The process of approaching the neighboring of a project that consisted on the recovery of the main communities is beginning, whose purpose is to understand agricultural crops of the area, creating jobs and economic the scope and influence of the power plant. growth. In Colombia, with the purpose of promoting development Open Power vision, in its commitment with the fulfillment and economic growth in the area of El Quimbo hydroelectric of United Nations’ Sustainable Development Goals, the power plant direct influence, we implemented a strategy Creation of Shared Value and compliance with its Human The business culture of Enel Américas is focused on the Rights Policy. Sustainability 151 Open Power Vision The following chart shows the distribution by country in Enel Américas: Enel Américas established the “Openness” concept in the center of its business, being the cornerstone of its strategic and operational approach: open energy to a larger number 44% of people; open energy to new technologies; provide new energy management methods for the consumer; open de possibility of new uses of energy; and open to a greater number of collaborators. 3% 5% Beneficiaries in 2017 Colombia Brazil Peru Argentina 49% 3% 5% Beneficiaries in 2017 Colombia 3% 2% 2. Affordable Energy (ODS 7): Give access to affordable, sustainable and clean energy through the Enabling Electricity initiative, which will benefit three million people, 44% 21% Argentina Brazil 49% Beneficiaries in 2017 Peru Brazil mainly in Africa, Asia and Latin America in 2020. During Colombia 2017, Enel Américas reached 454,880 people and the 74% Peru distribution by country is shown below: Argentina 3% 2% 21% 5% 6% 19% 5% 6% 19% Beneficiaries in 2017 Brazil Colombia 74% Beneficiaries in 2017 Peru 71% 71% Argentina Brazil Peru Colombia Argentina Beneficiaries in 2017 Brazil Peru Colombia Argentina Objectives of sustainable development As of 2015 the United Nations adopted the new Sustainable Development Goals (ODS), through them these organization called companies to promote the use of creativity and innovation to address the 17 great challenges of sustainable development, such as poverty, gender equality, access to water and clean energies and climatic change, among others. In this occasion, Enel SpA (“Enel”) announced the Group’s commitment to contribute the achievement of four out of the seventeen objectives. Particularly, Enel and its companies worldwide have been focused on the following objectives: 1. Quality Education (ODS 4): Support educational activities for 400,000 people by 2020 through projects similar to the ones in execution, such as the scholarship programs in Latin America. During 2017, Enel Américas reached 188,479 beneficiaries, meanwhile the Group already reached the goal of 400,000 beneficiaries, thus duplicating the objective for 2020. 152 Annual Report Enel Américas 20173% 5% 44% 49% Beneficiaries in 2017 Colombia Brazil Peru Argentina 3% 2% 21% Beneficiaries in 2017 Brazil Colombia 74% Peru 3. Decent Work and Economic Growth (ODS 8): Foster Argentina job creation and sustained economic growth, inclusive and sustainable for 500,000 people. During 2017, Enel Américas reached 98,095 people and the distribution by country is shown below: 5% 6% 19% Beneficiaries in 2017 71% Brazil Peru Colombia Argentina 4. Action for the Climate (ODS 13): Take initiatives to combat climate change, with the objective of achieving carbon neutrality in 2050. Human Rights Policy Enel Américas has developed a Human Rights Policy as a demonstration of its commitment and responsibility in this key area for social and corporate sustainability. The document gathers the commitment and responsibilities of the Company in relation to every human right, and especially to the ones that impact the business activity and operations developed by the company’s employees in the countries where it operates Under this regulatory framework, the Company performed in 2017 a Due Diligence process in the Human Rights field in the four countries where it operates, in order to identify those risk situations, prevent them and carry out a process of socialization of results for stakeholders. In 2018 and 2019 an action plan defined for each country will be implemented with every area of the company including the definition of actions to solve the identified gaps. Sustainability 153 18Schematic Table of Ownership 154 Annual Report Enel Américas 2017155 Letter from the Chairman156 Annual Report Enel Américas 2017Direct and Indirect Economic Participations Argentina Enel Generación Costanera S.A. Enel Generación El Chocón S.A Central Dock Sud. S.A. Edesur S.A. Compañía de Transmisión del Mercosur S.A. Transportadora de Energía S.A. Enel Trading Argentina S.R.L. Yacylec Termoeléctrica José de San Martin Termoeléctrica Manuel Belgrano Central de Vuelta Obligado S.A. Brazil Enel Brasil S.A. Central Generadora Termoeléctrica Fortaleza S.A. EGP Cachoeira Dourada S.A. Enel Distribución Río S.A. Enel Distribución Ceará S.A. Enel Cien S.A. Enel Green Power Proyectos I S.A (Volta Grande) Colombia Emgesa S.A. E.S.P. Codensa S.A. Peru Enel Generación Perú Enel Distribución Perú S.A Compañía Energética Veracruz Enel Generación Piura Chinango S.A.C Gx: Generation Dx: Distribution Tx: Transmission / Commercialization Ox: Gas Pipelines, others Business Ownership Gx Gx Gx Dx Tx Tx Tx Tx Gx Gx Gx Business Gx. Dx. Tx Gx Gx Dx Dx Tx Gx 75.59% 65.68% 40.25% 72.07% 99.62% 99.62% 99.95% 22.22% 16.98% 16.98% 25.36% Ownership 99.62% 99.62% 99.37% 99.26% 73.77% 99.62% 99.62% Business Ownership Gx Dx 48.48% 48.30% Business Ownership Gx Dx Gx Gx Gx 83.60% 83.18% 100% 96.50% 66.88% Schematic Table of Ownership 157 Perimeter of Enel Américas’ Corporate Shareholdings ENEL AMÉRICAS S.A. 48.481619% Emgesa S.A 94.95% Sociedad Portuaria Central Cartagena S.A. 4.90% Inversora Codensa S.A.S. 100% 48.3026% Codensa S.A. 22.22% Yacilec S.A. 0.2509% Central Dock Sud S.A. 69.9925% 57.1417% Inversora Dock Sud S.A. ENEL Generación Costanera S.A. 75.6813% 1.42% Termoeléctrica Manuel Belgrano S.A. 5.326% 1.42% Termoeléctrica José de San Martín S.A. 6.40% Central Vuelta de Obligado S.A. 5.326% 1.3% 18.85% 18.85% 33.2% 8.6741% ENEL Generación El Chocón S.A. 59.00% 41.9411% Hidroinvest S.A 54.7571% Chile Argentina Brazil Peru Colombia 158 GasAtacama Chile S.A. 0.1153% 99.8847% ENEL Argentina S.A. 45% ENEL Trading 55% Argentina S.R.L. Distrilec Inversora S.A. 51.50% 100% ENEL Perú S.A.C. ENEL Generación Perú S.A. 83.59701% 83.184% 96.50% ENEL Distribución Perú S.A. ENEL Generación Piura S.A. 100% Compañía Energética Veracruz S.A.C. 80% Chinango S.A.C. 2.32856% 56.3577% Edesur S.A. 43.0971% 50% SACME S.A. 97.67143% ENEL Brasil S.A. 99.93% Enel Distribución Goiás S.A. 1.00% INGENDESA DO BRASIL LTDA. ENEL Distribución Ceará S.A. 74.051061% 99.636997% EGP Cachoeira Dourada S.A. 99.754055% 100% ENEL Distribución Río S.A. ENEL Generación Fortaleza S.A. TESA S.A. 99.999% 0.001% CTM S.A. 99.999993% ENEL CIEN S.A. 100% 99.9999% ENEL Soluciones S.A. 100% EGP Projetos I (Volta Grande) Annual Report Enel Américas 2017 ENEL AMÉRICAS S.A. 48.481619% Emgesa S.A 94.95% Sociedad Portuaria 4.90% Central Cartagena S.A. Inversora Codensa S.A.S. 100% 48.3026% Codensa S.A. ENEL Generación Costanera S.A. 75.6813% 1.42% Termoeléctrica Manuel Belgrano S.A. 5.326% 1.42% Termoeléctrica José de San Martín S.A. 5.326% 1.3% 6.40% Central Vuelta de Obligado S.A. 18.85% 18.85% 33.2% ENEL 8.6741% Generación El Chocón S.A. 59.00% 41.9411% Hidroinvest S.A 54.7571% 22.22% Yacilec S.A. 0.2509% Central Dock Sud S.A. 69.9925% 57.1417% Inversora Dock Sud S.A. Chile Argentina Brazil Peru Colombia GasAtacama Chile S.A. 0.1153% 99.8847% ENEL Argentina S.A. 45% ENEL Trading Argentina S.R.L. 55% Distrilec Inversora S.A. 51.50% 100% ENEL Perú S.A.C. ENEL Generación Perú S.A. 83.59701% 83.184% 96.50% ENEL Distribución Perú S.A. ENEL Generación Piura S.A. 100% Compañía Energética Veracruz S.A.C. 80% Chinango S.A.C. 2.32856% 56.3577% Edesur S.A. 43.0971% 50% SACME S.A. 97.67143% ENEL Brasil S.A. 99.93% Enel Distribución Goiás S.A. 1.00% INGENDESA DO BRASIL LTDA. ENEL Distribución Ceará S.A. 74.051061% 99.636997% EGP Cachoeira Dourada S.A. 99.754055% 100% ENEL Distribución Río S.A. ENEL Generación Fortaleza S.A. TESA S.A. 99.999% 0.001% CTM S.A. 99.999993% ENEL CIEN S.A. 100% 99.9999% ENEL Soluciones S.A. 100% EGP Projetos I (Volta Grande) Schematic Table of Ownership 159 19Significant Events of the Company 160 Annual Report Enel Américas 2017161 Letter from the Chairman2017 Significant Events In accordance with articles 9 and 10, paragraph 2, under Securities Market Law N°18,045, and as established under General Norm No. 30 of the Superintendence, the following significant events were informed: > On January 11, 2017, the following significant event was (ANEEL) have granted the appropriate authorizations. informed: Consequently, the sale contract of approximately 94.8% equity of Celg Distribuição S.A. has been signed for a Pursuant to the provisions of Resolution No. 660 of total of BRL$ 2,187 million (equivalent to approximately 1986, of this Superintendence, a rectification of Form US$ 640 million). No.1 contained in the aforementioned resolution was sent through the SEIL Module on November 24, 2016 The purchase of CELG was financed with resources by Enersis Américas, today Enel Américas S.A. (“Enel raised in the Enel Américas capital increase approved at Américas” or the “Company”), in order to communicate the end of 2012. This acquisition increases the customers the distribution of an interim dividend, to be charged of Enel Brasil from a base of 7 to 10 million, which rises against the financial result of 2016, corresponding to the number of the Enel Group’ customers at a Global 15% of net income reported on September 20, 2016,and level to approximately 65 million. to be paid from January 27, 2017. > On April 27, 2017, the following significant event was > On February 14, 2017, the following significant event was informed: informed: In accordance with articles 9 and 10 under Securities Chilean Securities Market Law No. 18,045, and as Market Law No. 18,045, and as established under established under Chilean General Norm No. 30 of the General Norm No. 30 of the Superintendence, Enel Superintendence, Enel Américas informs the following Américas S.A. informs the following significant event: significant event: In accordance with articles 9 and 10, paragraph 2 under With regards to our subsidiary Enel Brasil, awarded the The Ordinary Shareholders’ Meeting of Enel public tender offer organized by the Brazilian Government Américas S.A. held today has agreed to distribute through Banco Nacional do Desenvolvimento (BNDES) the minimum mandatory dividend (from which the for the acquisition of the 94.8% shareholding of the interim dividend paid in January 2017 has been electricity distribution company Celg Distribuição S.A., deducted) as well an additional dividend that amounts which operates in the Brazilian State of Goias, informs to Ch$191,529,766,769 equivalent to Ch$ 3.33370 per through the significant event N° 83/2016 of November 30, share. 2016, the final closure of the operation has taken place since the antitrust authorities, Conselho Administrativo Given that the abovementioned interim dividend has de Defensa Econômica (CADE) and the sector already been paid, the distribution and payment of the regulator Agência Antimonopólica de Energia Eléctrica remaining portion of the final dividend No. 95 will be for a total of Ch$137,142,515,165, or Ch$2.38705 per share. 162 Annual Report Enel Américas 2017 As set forth in Circular Letter No. 660 of 1986, the two under General Norm No. 30 of the Superintendence, forms related to the aforementioned final dividend were Enel Américas informs of the following significant submitted to the SVS. event: the Board of Directors of Enel Américas S.A., in a session held on June 28, 2017, and in accordance with > On April 28, 2017, the following significant event was article 147 of the Chilean Companies Act Law 18,046, informed: decided to introduce certain modifications to its Related- party transaction policy and has approved a revised text In accordance with articles 9 and 10, paragraph 2 under of said policy as follows: Chilean Securities Market Law No. 18,045, and as established under Chilean General Norm No. 30 of the 1.- Financial transactions with related parties and which Superintendence, Enel Américas informs the following under the name of a commercial current account and/ significant event: or financial loans are entered into in order to optimize the cash management of the respective companies are The Extraordinary Shareholders’ Meeting of Enel considered habitual. Américas S.A. (“Enel Américas” or the “Company”) held on April 27, 2017, has adopted, amongst others, the 2. Transactions of a financial nature or of financial following agreements: intermediation that the Company normally carries out with related parties consisting of banking entities or 1. The cancellation of treasury shares acquired in subsidiaries of such banking entities, such as fixed or the context of the merger of Endesa Américas variable income financial investments, the purchase and Chilectra Américas into Enel Américas as of and sale of foreign currencies, financial derivatives, December 1, 2016 and the subsequent capital “swaps”, repurchase agreement (repo), term deposits, decrease from Ch$ 4,621,809,178,631 Chilean pesos overdraft facilities, promissory note loans, letters of divided into 58,324,975,387 common registered credit, performance bonds, “stand-by letters of credit”, shares, all of the same series and with no par value “forwards” contracts, exchange rate hedge, options and to Ch$ 4,527,762,465,556 Chilean pesos, divided into futures, operations related to the Company’s current 57,452,641,516 common registered shares, all of the accounts or other habitual financial operations carried same series and with no par value. out by the Treasury Department of Enel Américas S.A. 2. The change of the functional currency of Enel Américas are considered habitual. S.A. from Chilean pesos to United States dollars, thereby 3. Transactions with related parties related to IT services, modifying permanent Article Five of its bylaws in order infrastructure services, “data center”, micro-informatics, to denominate the Company’s capital in that currency, “software” and “hardware” and in general data thus establishing that the Company’s capital is now management. 6,763,204,424 U.S. dollars divided into 57,452,641,516 common shares, all of the same series and with no 4. Transactions with related parties related to financial par value which, pursuant to transitory Article 1 of management, management services and other these bylaws, and as agreed by the Extraordinary similar ones, consisting, among others, of accounting, Shareholders’ Meeting, are fully subscribed and paid. financial reporting, fixed assets, purchase and sale ledgers, treasury and banks, taxation advisory services, > On June 29, 2017, the following significant event was insurance, procurement, controllership and internal informed: audit. In accordance with articles 9 and 10, paragraph 2 under 5. Shareholding or capital acquisition or sale transactions Securities Market Law No. 18,045, and as established of the Company’ subsidiaries or affiliates or, in general, Significant Events of the Company 163 companies in which the Company has a direct or indirect signing and closure of the operations is expected to take participation held with related companies, in order to place on November 30, 2017. proceed to corporate or asset restructuring, and which do not exceed 5% of the company’s capital share in Management shall explain the tender process in more relation to which the transaction is taking place. detail in a “conference call” which shall take place on September 29, 2017 at 12.30 hours, Santiago, Chile > On September 21, 2017, the following significant event time. was informed: > On October 4, 2017, the following significant event was In accordance with articles 9 and 10, paragraph 2 under informed: Securities Market Law No. 18,045, and as established under General Norm No. 30 of the Superintendence, In accordance with articles 9 and 10, paragraph 2 under Enel Américas informs of the following significant Securities Market Law No. 18,045, and as established event: On September 21, 2017, Enel Américas S.A. under General Norm No. 30 of the Superintendence, paid BRL$ 389,575,000, equivalent to US$ 125 million, Enel Américas informs of the following significant event: in cash in relation to the capital increase in its Brazilian subsidiary Enel Brasil S.A. . After the capital increase, Today the Peruvian subsidiary Enel Perú S.A.C., fully the participation of Enel Américas S.A. in Enel Brasil S.A. owned by Enel Américas S.A. has acquired 47,686,651 increased to 95.44% from 95.25%. shares issued by the Peruvian Subsidiary Enel Distribucion Perú S.A.A., equivalent to 7.5% of the This operation is part of the use of process raised in the last company. Taking into consideration this purchase, capital increase of Enersis S.A., currently Enel Américas Enel Américas has increased its direct and indirect S.A., approved by the Extraordinary Shareholders’ shareholding through the subsidiary Enel Perú to 83.2% Meeting held on December 20, 2012 that satisfactorily of the property of Enel Distribucion Perú. The referred ended with 100% of the shares available subscribed in to transaction has totaled 262,276,580 Peruvian soles March, 2013, collecting Ch$1,121,458 in cash. (approximately equivalent to US$ 80 million) and it took > On September 27, 2017, the following significant event was informed: place on the trading floor of the Lima Stock Exchange. Considering that Enel Américas S.A. already controlled and, therefore, consolidated Enel Perú S.A.C. and Enel In accordance with articles 9 and 10, paragraph 2 under Distribucion S.A.A., said operation does not lead to any Securities Market Law No. 18,045, and as established effects in the Comprehensive Income Statements of Enel under General Norm No. 30 of the Superintendence, Américas and does not modify the assets and liabilities of Enel Américas informs of the following significant event: said subsidiaries registered in the Consolidated Balance that our subsidiary Enel Brasil S.A. has presented the Sheet of Enel Américas S.A. The effects of this higher best financial offer for the subscription of the concession stock ownership on part of Enel Américas S.A. shall be for hydroelectric generation for 30 years corresponding reflected in the Income Statement of the controlling to the Volta Grande facility with a 380 MW installed company. capacity, located in the State of Mina Gerais, Brazil. The financial offer amounts to BRL$ 1,419,783,357 interests buyout included in the Company’s Strategic which is equivalent to US$ 445 million. Plan. This transaction is fully in line with the policy of minority It is expected that the announcement of the final result > On November 30, 2017, the following significant event of the tender should be made on October 7, 2017. The was informed: 164 Annual Report Enel Américas 2017 In accordance with articles 9 and 10 under Securities Taking into consideration that the contents of the referred Market Law N°18,045, and as established under General Strategic Plan follow and are based on projections and Norm N° 30 of the Superintendence, Enel Américas hypotheses that might or might not come true in the informs of the following significant event: as of this date future, its effects cannot be established at this date. Enel Brasil has made a payment through an investment vehicle created for such purposes of BRL$ 1,419,784,000 > On November 30, 2017, the following significant event (approximately US$ 445 million), for the acquisition was informed: of the concession of Central Hidrogeneradora Volta Grande, located in the State of Minas Gerais, Brazil. In accordance with articles 9 and 10, under Securities For that purpose, on November 27, 2017, Enel Americas Market Law N°18,045, and as established under General subscribed and paid a cash capital increase in Enel Brasil Norm No. 30 of the Superintendence, Enel Américas of BRL$ 568 million (approximately US$ 178 million) S.A. informs of the following significant event: in session under the terms approved by its Board of Directors in its held on November 29, 2017, the Board of Directors of session held on October 26, 2017. Enel Américas S.A., unanimously agreed to distribute an interim dividend of US$ 0.00100 per share on With the completion of the aforementioned operation, January 26, 2018, attributable to the 2017 fiscal period, the proceeds of the capital increase are fully invested corresponding to 15% of net income as of September as approved by the Company’s Extraordinary Meeting 30, 2017, in accordance with the Company’s dividend of Shareholders known formerly as Enersis S.A. held on policy. December 20, 2012. > On November 30, 2017, the following significant event pesos, the legal currency, converted according to the was informed: Observed Dollar exchange rate published in the Official The aforementioned dividend will be paid in Chilean Gazette on January 19, 2018. In accordance with articles 9 and 10 under Securities Market Law N°18,045, and as established under General Norm N° 30 of the Superintendence, Enel Américas S.A. informs of the following significant event: yesterday, the Board of Directors of Enel Américas, has approved the Strategic Plan of Enel Américas for the period of 2018-2020. A copy of the aforementioned Strategic Plan can be obtained from the Company’s website at www. enelamericas.com. Significant Events of the Company 165 20Identification of subsidiaries and associate companies 166 Annual Report Enel Américas 2017167 Letter from the ChairmanCENTRAL DOCK SUD S.A. Company Name Central Dock Sud S.A. Type of Company Limited Liability Company Address Avenida Debenedetti 1636 Dock Sud Avellaneda Phone 4229-1000 Subscribed and paid-in capital (US$ thousand) 57,566.11 Corporate purpose The corporate purpose of the company is the generation of electricity and its block sale. The company may carry out any supplementary and subsidiary activities linked to its corporate purpose, having to that effect full legal capacity to acquire rights and commit obligations and execute all acts not forbidden by law, by these By-laws, the Document of the International Public Tender for the Sale of Central Dock Sud S.A’s Shares, or by any applicable regulation. Core business Electricity generation Regular Directors Hector Martin Mandarano (Chairman) Santiago Matías Sajaroff (Vice Chairman) Paolo Pescarmona Antonio Ascione Mauricio Bezzeccheri Mónica Analía Ciacciarelli Andrea Biasotto Rodolfo Eduardo Berisso Paula Maria Garcia Kedinger Alternate Directors (Enel’s vacant position) Mónica Diskin Gaetano Salierno María Eugenia Pardo Patricio Cipollone María Victoria Ramírez Raul Angel Rodriguez Julian Matias Ferreiro Daniel Gustavo Ciaffone Senior Management Gustavo Diego Manifesto General Manager Alejandro Serantes Finance Manager Julio Temen Commercial Manager David Garcia Albalá Operations Manager Graciela Babini Planning and Control Manager Business Relations The company has no commercial relations with Enel Américas S.A. 168 CENTRAL VUELTA OBLIGADO S.A. Company Name Central Vuelta Obligado S.A. Type of Company Limited Liability Company Address Av. Thomas Edison 2701 Buenos Aires, Argentina Phone (5411) 5533 0200 Subscribed and paid-in capital (US$ thousand) 31.47 Corporate purpose Generation of electricity and its commercialization by blocks and particularly, equipment purchasing management, construction, operation and maintenance of a thermal power plant named Vuelta Obligado complying with “Management and Operation of Projects, Increase of Thermal Generation Availability and Generation Compensation Adaptation 2008-2011 Agreement” agreed upon November 25, 2010 by the National State and the signing generation companies. Core business Construction of a thermal power plant called Central Vuelta de Obligado. Regular Directors Leonardo Pablo Katz (Chairman) Adrián Gustavo Salvatore (Vice Chairman) Andrea Biasotto Mónica Diskin Alternate Directors Leonardo Marinaro Ignacio Villamil Antonino Ascione Senior Management Leonardo Pablo Katz General Manager Business Relations The company has no commercial relations with Enel Américas S.A. CHINANGO S.A.C. Company Name Chinango S.A.C. Type of Company Limited Liability Company Address Calle César López Rojas N° 201, Urb. Maranga, San Miguel Lima, Peru Subscribed and paid-in capital (US$ thousand) 82,236.89 Corporate purpose Electricity generation, trading and transmission, being able to perform all acts and to engage all contracts that the Peruvian law allows for such purposes. Core business Electricity generation Gerente General Enel Generación Perú S.A.A., represented by Eugenio Calderón López Business Relations The company has no commercial relation with Enel Américas S.A. CODENSA Company Name CODENSA S.A. E.S.P. NIT: 830,037,248-0 Type of Company Limited Liability Company– Public residential utility company. Address Carrera 13 A No. 93-66 Bogotá D.C, Colombia Phone (57 1) 601 6060 Subscribed and paid-in capital (Thousand USD) 4,518.09 Corporate purpose The company’s main purpose is the distribution and sale of electricity, as well as all similar, connected, complementary and related activities with respect to electricity distribution and sale; the execution of electrical engineering works, design and consultancy, and sale of products for the benefit of its customers. The society may also perform other activities related to the provision of public services in general, Annual Report Enel Américas 2017manage and operate other utility companies, sign and execute special management agreements with other utility companies and sell or loan goods or services to other economic agents related with utilities, in or out of the country. The society may also participate as partner or shareholder in other utility companies, directly, or joining into partnerships with other persons, or in joint venture with them. Core business Electricity distribution and commercialization. Regular Directors David Felipe Acosta Correa Jose Antonio Vargas Lleras Lucio Rubio Diaz Gloria Astrid Álvarez Hernandez Felipe Castilla Canales José Franco Reyes Andrés López Valderrama Diretores suplentes Carlos Mario Restrepo Leonardo Lopez Vergara Juan Manuel Pardo Gomez Ernesto Moreno Restrepo Eduardo Jose Bernardo Aguirre Monroy Ivan Darío Gomez Castaño Vicente Enrique Noero Arango Senior Management David Felipe Acosta Correa General Manager David Felipe Acosta Infrastructure & Networks Manager Andres Caldas Rico Legal and Corporate Affairs Manager Carlos Mario Restrepo Market Manager Daniele Caprini Administration, Finance and Control Manager Maria Celina Restrepo Santa Maria Communications Manager Rafael Carbonell Blanco Human Resources and Organization Manager Diana Marcela Jimenez Regulation and Institutional Relations Manager Eugenio Belinchon Audit Manager Raúl Fernando Vacca Ramírez Procurement Manager Ana Patricia Delgado Meza Systems and Telecommunications ICT Manager Ana Lucia Moreno Moreno General Services and Safety Manager Carlo Ferrara Sustainability Manager Business Relations The company has no commercial relations with Enel Américas S.A. COMPAÑÍA ENERGÉTICA VERACRUZ S.A.C. Company Name Compañía Energética Veracruz S.A.C. Type of Company Limited Liability Company Address Calle César López Rojas N° 201, Urb. Maranga, San Miguel Lima, Peru Subscribed and paid-in capital (US$ thousand) 890.82 Corporate purpose Develop and operate hydroelectric projects located in any river basin in Peru. Core business Owner of Veracruz hydroelectric project. General Manager Jean Philippe Salvatore Bellavia Business Relations The company has no commercial relations with Enel Américas S.A. CTM Compañía de Transmisión del Mercosur S.A. Company Name Compañía de Transmisión del Mercosur S.A. Type of Company Publicly traded company constituted in Buenos Aires, Argentina Address Bartolomé Mitre 797, 11th Floor, Buenos Aires, Argentina Subscribed and paid-in capital (US$ thousand) 5.23 Corporate purpose The provision of high tension electricity transmission services, in the case of linking both national and international electrical systems, according to current laws, to the purpose of which it may participate in national or international tenders, become a high tension electricity transmission concessionaire, locally or abroad, and perform those activities deemed necessary to carry out its purposes. Core business International interconnected electricity transmission. Regular Directors Juan Carlos Blanco (Chairman) Paolo Giovanni Pescarmona (Vice Chairman) Mónica Diskin Alternate Directors Gaetano Salierno Nagelo Cefalu Senior Management Sandro Ariel Rollan General Manager Business Relations The company has no commercial relations with Enel Américas S.A. DISTRILEC INVERSORA S.A. Company Name Distrilec Inversora S.A. Type of Company Limited Liability Company Address San José 140 Buenos Aires, Argentina Phone (54 11) 4370 3700 Subscribed and paid-in capital (US$ thousand) 26,438 Corporate purpose Exclusively to invest in companies constituted or to be constituted whose main activity is the distribution of electricity or that directly or indirectly participate in companies with that principal business through all kind of financial and investment activities, except those in the laws of financial entities, the purchase and sale of public and private debt paper, bonds, shares, negotiable instruments and the granting of loans, and the placement of its funds in bank deposits of any kind. Core business Investment Company. Regular Directors Maurizio Bezzecheri Paolo Giovanni Pescarmona (Vice Chairman) Mónica Diskin Juan Carlos Blanco Gonzalo Peres Moore Mariano Luis Luchetti Guillermo Pablo Reca Jorge Carlos Bledel Juan Carlos Casas 169 Identification of Subsidiaries and Associate CompaniesAlternate Directors María Inés Justo Gaetano Salierno Marcello Coffaro Angelo Cefalu Janeth Cabrera Brambilla Adrián Salvatore Leonardo Marinaro José Manuel Pasos Rubén López Rubén Vázquez Business Relations The company has no commercial relations with Enel Américas S.A. EDESUR Company Name Empresa Distribuidora Sur S.A. Type of Company Sociedad Anónima Address San José 140 (1076) Capital Federal, Argentina Phone (54 11) 4370 3700 Subscribed and paid-in capital (US$ thousand) 44,904 Corporate purpose Distribution and commercialization of electricity and related activities. Core business Electricity distribution. Regular Directors Juan Carlos Blanco (Chairman) Paolo Giovanni Pescarmona (Vice Chairman) Monico Hodor Gonzalo Peres Moore Guillermo P. Reca Paula Aguiar Ernesto Pablo Badaraco Gerardo Marcelo Silva Iribarne Mónica Diskin Alternate Directors Gaetano Salierno María Victoria Ramirez Marcello Coffaro Rubén Vazquez Rubén Omar Lopez Angelo Cefalu Janeth Cabrera Brambilla María Inés Justo Senior Management Jiuiseppe Fanizzi General Manager Business Relations The company has no commercial relations with Enel Américas S.A. 170 ELÉCTRICA CABO BLANCO S.A.C. * Company Name Eléctrica Cabo Blanco S.A.C. Type of Company Limited Liability Company Address Calle César López Rojas 201, Urb. Maranga, San Miguel Lima, Peru Corporate purpose In general, to invest in other companies, preferably in those oriented to exploiting natural resources, and very specially, in those linked to distribution, transmission and generation of electricity. Likewise, it may make capital investments in any kind of movable property, including shares, bonds and any other kind of securities, as well as administration of said investments within limits fixed by the Board and the General Shareholders’ Meeting. The activities that make up the corporate purpose may be developed in Peru and abroad. *Company absorbed by Enel Perú S.A.C as of April 28, 2017. EMGESA Company Name Emgesa S.A. E.S.P. NIT 860,063,875-8 Type of Company Private Commercial Corporation. Public Utility Company Address Carrera 11 N°82-76, 4th Floor Bogotá, D.C. Colombia Alternate Directors General Manager Bruno Riga Renewables Energies Manager Marcelo Falcuchi Thermal Generation Manager Andres Caldas Rico Legal and Corporte Affairs Manager Fernando Javier Gutierrez Medina Energy Trading Manager Daniele Caprini Administration, Finance and Control Manager Maria Celina Restrepo Santamaría Communications Manager Rafael Carbonell Blanco Human Resources and Organization Manager Diana Marcela Jimenez Rodriguez Regulation and Institutional Relations Manager Eugenio Belinchon Audit Manager Raúl Fernando Vacca Ramírez Procurement Manager Ana Patricia Delgado Meza Systems and Telecommunications ICT Manager Ana Lucia Moreno Moreno General Services and Safety Manager Carlo Ferrara Sustainability Manager Business Relations The company has no commercial relations with Enel Américas S.A. EMGESA PANAMÁ, S.A. * Company Name Emgesa Panamá, S.A. Type of Company Limited Liability Company, not listed and it’s not a securities issuer. Address City of Panama, Panama Subscribed and paid-in capital (US$ thousand) 219,487.83 Corporate purpose The corporate purpose of the company is generation and sale of electricity and sale of fuel gas, as well as all activities similar, connected, supplementary and related to its main purpose. Corporate purpose Purchase, sale, import and export of electricity. Additionally, the company may perform other industrial and commercial activities in general; it is able to celebrate all transactions, operations, business, events and activities that are permitted by the Panamanian law to corporations even if they are not expressly mentioned in this corporate purpose. Core business Electricity and fuel gas generation and commercialization. Core business Purchase, sale, import and export of electricity. Regular Directors Bruno Riga Lucio Rubio Diaz Jose Antonio Vargas Lleras Gloria Astrid Álvarez Hernandez Luisa Fernanda Lafaurie Rivera Diana Margarita Vivas Munar Luis Fernando Alarcón Mantilla Directores Fernando Gutierrez Medina Leonardo Lopez Vergara Juan Manuel Pardo Andres Caldas Rico Senior Management Fernando Gutierrez Medina Annual Report Enel Américas 2017ENEL ARGENTINA S.A. Phone (21) 2716-1138 Presidente y Representante Legal Juan Manuel Pardo Gomez Vice Chairman (First) Leonardo Lopez Vergara (Second) Vice Chairman Business Relations The company has no commercial relations with Enel Américas S.A. *The early dissolution of Emgesa Panamá S.A. was agreed at the Extraordinary Shareholders’ Meeting of the company held on May 30, 2017. Company Name Enel Argentina S.A. Type of Company Publicly Traded Company Address Av. España 3301 Buenos Aires, Argentina Phone (5411) 4307 3040 Subscribed and paid-in capital (US$ thousand) 120,171.21 Corporate purpose Carry out investments in companies dedicated to the production, transmission and distribution of electricity and its commercialization, as well as financial activities except those limited by the law to banks. Core business Investment Company. Regular Directors Mauricio Bezzeccheri (Chairman) Paolo Giovanni Pescarmona (Vice Chairman) Mónica Diskin Alternate Directors Gaetano Salierno María Victoria Ramírez ENEL BRASIL INVESTIMENTOS SUDESTE S.A Company Name Enel Brasil Investimentos Sudeste S.A companies in that sector, in Brazil or abroad; transmission, distribution, generation or commercialization of electricity and related activities and participation, individually or through joint ventures, consortia or other similar forms of association, in tenders, projects and enterprises for the supply of services and activities previously mentioned. Type of Company Limited Liability Company. Core business Investment Company. Address Praça Leoni Ramos, nº 1, 7º andar, bloco 2, São Domingos. Niterói, Rio de Janeiro. Directorio Mario Fernando de Melo Santos (Chairman) Luca D’Agnese (Vice Chairman) Antonio Basilio Pires de Carvalho e Albuquerque Aurelio Ricardo Bustilho de Oliveira Anna Brogi Corporate purpose Its purpose is the planning, development and execution of generation, distribution, transmission and/ or commercialization activities of electric energy. Likewise, the participation in the equity capital of other companies and entities that operate or constitute to act in the generation, distribution, transmission and/ or commercialization of electric energy segments as partners, consortia or shareholder. Core business Electricity generation. Company that doesn’t have management board (Board of Directors) Senior Management Carlo Federico Vladimir Il’ic Zorzoli (General Management) Aurelio Ricardo Bustilho de Oliveira Senior Management Carlo Federico Vladimir Il‘ic Zorzoli (General Manager) Aurelio Ricardo Bustilho de Oliveira Antonio Basilio Pires de Carvalho E Albuquerque Carlos Ewandro Naegele Moreira José Alves de Mello Franco José Nunes de Almeida Neto Janaina Savino Vilella Carro Flávia da Silva Baraúna Margot Frota Cohn Pires Márcia Massotti de Carvalho Luis Alonso Campos Rivas Guilherme Gomes Lencastre Matteo de Zan Cristine de Magalhães Marcondes André Osvaldo dos Santos Carlos Omar Arriagada Retamal Roberto Zanchi Bruno Cecchetti Business Relations The company has no commercial relations with Enel Américas S.A. Business Relations The company has no commercial relations with Enel Américas S.A. ENEL BRASIL S.A. ENEL CIEN S.A. Company Name Enel Brasil S.A. Company Name ENEL CIEN S.A. Type of Company Limited Liability Company Type of Company Limited Liability Company Business Relations The company has no commercial relations with Enel Américas S.A. Address Praça Leoni Ramos, N°1, 7° andar, bloco 2 Parte, Niterói, Río de Janeiro, Brasil Phone (5521) 3607 9500 Subscribed and paid-in capital (US$ thousand) 2,048,191.57 Address Praça Leoni Ramos, N° 1, piso 6, Bloco 2, SãoDomingos, Niterói Río de Janeiro, Brasil Phone (55 21) 3607 9500 Subscribed and paid-in capital (US$ thousand) 86,046.49 Corporate purpose Participate in the capital of other companies in any segment of the electricity sector, including companies that provide services to Corporate purpose The purpose of the company is the production, industrialization, distribution and 171 Identification of Subsidiaries and Associate CompaniesENEL DISTRIBUCIÓN GOIÁS S.A. Company Name Celg Distribuição S.A. - Celg-D Type of Company Limited Liability Company. Address Rua 2, Quadra A-37, nº 505, Jardim Goiás, Goiânia, Goiás. Phone 62 3243 1771 Subscribed and paid-in capital (US$ thousand) 1,406,316.22 Corporate purpose The corporate purpose is the technical and commercial exploration of electricity distribution. Core business Electricity Distribution Directorio Mario Fernando de Melo Santos (Chairman) Carlo Federico Vladimir Il’ic Zorzoli (Vice Chairman) Antonio Basilio Pires de Carvalho e Albuquerque Gianluca Caccialupi Aurelio Ricardo Bustilho de Oliveira Maria Eduarda Fischer Alcure Senior Management Abel Alves Rochinha (General Manager) Rodrigo Raposo da Camara Machado Nelson Ribas Visconti Déborah Meirelles Rosa Brasil Raimundo Câmara Filho Roberto Nunes Fonseca Junior Emerson Caçador Rubim Carlos Omar Arriagada Retamal Business Relations The company has no commercial relations with Enel Américas S.A. trading acts related to those activities. Likewise, the company may carry out studies, planning, projects, construction and operation of production, transformation, transportation and storage, distribution and sale of energy systems, of any origin, in the form of concessions, authorizations or permits it may be awarded, with jurisdiction in the territory of the State of Ceará, and others defined in the Grantor. The Society may also carry out studies, projects and planning and research and development programs of new energy sources, especially renewable, and the study, making and execution, in the energy sector, of plans and programs for economic and social development, in places of interest for the community and for the company. Core business Distribution and sale of electricity and related services in the State of Ceará, Brazil. Regular Directors Mário Fernando de Melo Santos (Chairman) Carlo Federico Vladimir Il‘ic Zorzoli (Vice Chairman) Anna Brogi Monica Hodor Ramón Francisco Castañeda Ponce Gianluca Caccialupi Cristine de Magalhães Marcondes Francisco Honório Pinheiro Alves Fernando Antonio de Moura Avelino Fernando Augusto Macedo de Melo Aurelio Ricardo Bustilho de Oliveira Alternate Directors Márcia Sandra Roque Vieira Silva José Nunes de Almeida Neto Maria Eduarda Fischer Alcure Deborah Meirelles Rosa Brasil Teobaldo José Cavalcante Leal José Tavora Batista Carlos Ewandro Naegle Moreira Marcia Massotti de Carvalho Cesario Macedo de Melo Neto Nelson Ribas Visconti Dilma Maria Toledo Senior Management Roberto Zanchi (General Manager) José Távora Batista Aurelio Ricardo Bustilho de Oliveira Carlos Ewandro Naegele Moreira José Nunes de Almeida Neto Janaina Savino Vilella Carro José Alves Mello Franco Margot Frota Cohn Pires Déborah Meirelles Rosa Brasil Fernando Andrade Márcia Sandra Roque Vieira Silva Business Relations The company has no commercial relations with Enel Américas S.A. commercialization of electricity, including the import and export activities. In view of achieving the purposes mentioned above, the company will promote the study, planning and construction of facilities for production systems, transmission, conversion and distribution of electricity by capturing the necessary investment to develop the activities and by providing services. Beyond the purposes referred to, the company may promote the implementation of associated products, as well as inherent, ancillary or complementary activities to services and jobs that come to provide. To carry out the activities necessary to achieve its goals, the company may participate in other societies. Core business Electricity transmission. Directorio Carlo Federico Vladimir Il‘ic Zorzoli (Chairman) Julia Freitas de Alcantara Nunes (Vice Chairman) Orestes Lizardo Castañeda Pacheco Senior Management Abel Alves Rochinha (General Manager) Aurelio Ricardo Bustilho de Oliveira Orestes Lizardo Castañeda Pacheco José Alves Mello Franco Déborah Meirelles Rosa Brasil Carlos Ewandro Naegele Moreira José Nunes de Almeida Neto Janaina Savino Vilella Carro Margot Frota Cohn Pires Business Relations The company has no commercial relations with Enel Américas S.A. ENEL DISTRIBUCIÓN CEARÁ Company Name Companhia Energética do Ceará Type of Company Publicly Traded Company Address Rua Padre Valdevino, 150 - Centro Fortaleza, Ceará, Brasil Phone (55 85) 3453-4082 Subscribed and paid-in capital (US$ thousand) 185,935.99 Corporate purpose Generation, transmission, distribution and commercialization of electricity, performing awarded or authorized correlated services, and the development of activities associated with the services, as well as celebrating 172 Annual Report Enel Américas 2017ENEL DISTRIBUCIÓN PERÚ S.A.A. ENEL DISTRIBUCIÓN RÍO S.A. ENEL GENERACIÓN COSTANERA S.A. Company Name Enel Distribución Perú S.A.A. Type of Company Publicly Traded Company Company Name Ampla Energia e Serviços S.A. Type of Company Sociedad Anónima Abierta Address Calle César López Rojas 201 Urb, Maranga, San Miguel Lima, Perú Address Praça Leoni Ramos, N° 01, São Domingos, Niteroi Río de Janeiro, Brasil Phone (51 1) 561 2001 Phone (55 21) 2613 7000 Subscribed and paid-in capital (US$ thousand) 164,177.92 Subscribed and paid-in capital (US$ thousand) 754,141.23 Company Name Enel Generación Costanera S.A. Type of Company Publicly Traded Company Address Avda, España 3301, Buenos Aires, Argentina Phone (5411) 4307 3040 Subscribed and paid-in capital (US$ thousand) 37,986.13 Corporate purpose Electricity generation and trading in blocks of energy. Core business Electricity generation. Regular Directors Juan Carlos Blanco (Chairman) Antonino Ascione (Vice Chairman) María Victoria Ramírez Mónica Diskin César Fernando Amuchástegui Matías Maria Brea Marcelo Luis Diez Corporate purpose Study, plan, project, build and explore electricity production, transmission, transformation, distribution and sale systems, and provide related services that have been or may be conceded; carry out research in the energy sector, participate in regional, national or international organizations dedicated to the planning, operation, technical Exchange and business development related to the electricity industry and participate as a shareholder in other companies in the energy sector, even within the framework of Brazil´s privatization program. Core business Electricity Distribution Regular Directors Mario Fernando de Melo Santos (Chairman) Monica Hodor (Vicepresidente) Carlo Federico Vladimir Il’ic Zorzoli José Távora Batista José Alves de Mello Franco Aurélio Ricardo Bustilho de Oliveira Luiz Carlos Franco Campos Alternate Directors Gaetano Aslierno Fernando Boggini Marcello Coffaro Rodrigo Quesada Mariana Mariné Janeth Cabrera Senior Management Andrea Biasotto General Manager Alternate Directors Otacilio de Souza Junior Déborah Meirelles Rosa Brasil Flávia da Silva Baraúna Márcia Massotti de Carvalho Gabriel Maluly Claudio César Wayne da Cunha Carlos Ewandro Naegele Moreira Senior Management Ramón Francisco Castañeda Ponce (General Manager) Aurelio Ricardo Bustilho de Oliveira Carlos Ewandro Naegele Moreira José Nunes de Almeida Neto Janaina Savino Vilella Carro José Alves Mello Franco Déborah Meirelles Rosa Brasil Margot Frota Cohn Pires Fernando Andrade Márcia Sandra Roque Vieira Silva Business Relations The company has no commercial relations with Enel Américas S.A. Business Relations The company has no commercial relations with Enel Américas S.A. 173 Corporate purpose Engage the activities of distribution, transmission and generation of electricity in accordance with the provisions of current legislation. Additionally, the company may engage in the sale of goods in any form, as well as providing consulting and financial services, among others, except those services, which require specific authorization in accordance with current law. Core business Electricity Distribution Directorio Carlos Temboury Molina (Chairman) Guillermo Lozada Pozo (Vice Chairman) Riccardo Lama Carlos Solis Pino Gianluca Caccialupi Fernando Fort Marie Mario Ferrari Quiñe José De Bernardis Cuglievan Senior Management General Manager Ricardo Lama Guillermo Martin Lozada Pozo Administration, Finance & Control Manager Carlos Alberto Solis Pino Commercial Manager Luis Salem Hone Legal Counsel Milagritos Tatiana Lozada Gobea Regulation Manager Rocío Pachas Soto Organization and Human Resources Manager María Alicia Martínez Venero Communications Manager Business Relations The company has no commercial relations with Enel Américas S.A. Identification of Subsidiaries and Associate CompaniesENEL GENERACIÓN EL CHOCÓN S.A. Company Name Enel Generación El Chocón S.A. Phone (55 85) 3464-4100 also the civil, industrial, commercial and any other act or operation related or leading to its Main Corporate Purpose. Subscribed and paid-in capital (US$ thousand) 45,864.88 Core business Electricity generation. Type of Company Publicly Traded Company Address Avda, España 3301 Buenos Aires, Argentina Subscribed and paid-in capital (US$ thousand) 15,616.06 Corporate purpose Electricity Generation and its block commercialization Core business Electricity generation. Regular Directors Mauricio Bezzeccheri (Chairman) Paolo Giovanni Pescarmona (Vice Chairman) Mónica Diskin María Victoria Ramírez Antonino Ascione Alex Daniel Horacio Valdez Juan Carlos Nayar Alberto Eduardo Mousist Alternate Directors Daniel Martini Marcello Coffaro Fernando Boggini Rodrigo Quesada Mariana Mariné Sebastián Eduardo Guasco Oscar Horacio Carvalho Enrique Díaz Riva Senior Management Daniel Garrido General Manager ENEL GENERACIÓN FORTALEZA S.A. Company Name CGTF - Central Geradora Termeléctrica Fortaleza S.A. Type of Company Limited Liability Company Address Rodovia 422, Km 1 s/n, Complexo Industrial e Portuário de Pecém Caucaia Ceará, Brasil 174 Corporate purpose To study, project, construct and explore electricity production, transmission, distribution and trading systems, awarded, permitted or authorized by any rights title, as well as any other activity related to the aforementioned activities; acquisition, obtaining and exploration of any right, concession or privilege related to the aforementioned activities, as well as the practice of all other acts and businesses necessary to reach its purpose; and participation in other companies or societies corporate capital, as shareholder, partner or on account of participation, whichever its purposes are. Regular Directors Carlos Temboury Molina (Chairman) Marco Raco Eugenio Calderón López Guillermo Martín Lozada Pozo Rocío Pachas Soto Francisco García Calderón Portugal Claudio Herzka Buchdahl Alternate Directors Jean Philippe Salvatore Bellavia Rigoberto Novoa Velásquez Daniel Abramovich Ackerman Carlos Sedano Tarancón Úrsula De La Mata Torres Milagritos Tatiana Lozada Gobea Ernesto Villanueva Roca Core business Electricity generation. Directorio Carlo Federico Vladimir Il‘ic Zorzoli (Chairman) Marcelo Falcucci Aurelio Ricardo Bustilho de Oliveira Senior Management Aurelio Ricardo Bustilho de Oliveira (Interim General Manager) Pedro Werbest Alves Silva Claudia Maria Suanno Janaina Savino Vilella Carro Raimundo Câmara Filho Ana Claudia Gonçalves Rebello José Nunes de Almeida Neto José Alves de Mello Franco Margot Frota Cohn Pires Business Relations The company has no commercial relations with Enel Américas S.A. Company Name Enel Generación Perú S.A.A. Type of Company Publicly Traded Company Senior Management Marco Raco General Manager Pedro Cruz Vine Energy Management and Trading Manager Daniel Abramovich Ackerman Legal Counsel Guillermo Marín Lozada Pozo Administration, Finance and Control Manager Business Relations The company has no commercial relations with Enel Américas S.A. ENEL GENERACION PIURA S.A. Company Name Enel Generación Piura S.A. Type of Company Publicly traded company Address Calle César López Rojas 201, Urb. Maranga, San Miguel Lima, Perú Subscribed and paid-in capital (US$ thousand) 25,172.98 Address Calle César Lopez Rojas N° 201, Urb. Maranga, San Miguel Lima, Peru (address change according to memo 2015) Corporate purpose The main purpose of the company is the generation, sale and transmission of electricity, performing all acts and signing all agreements allowed by current legislation. Subscribed and paid-in capital (US$ thousand) 859,200.01 Corporate purpose In general, electricity generation activities, Core business Electricity generation and sale of natural gas. Directors Carlos Temboury Molina (Chairman) Marco Raco (Vice Chairman) Guillermo Martin Lozada Pozo Business Relations The company has no commercial relations with Enel Américas S.A. ENEL GENERACIÓN PERÚ S.A.A. Annual Report Enel Américas 2017Ejecutivos principales Marco Raco (representing Enel Generación Perú S.A.A.) General Manager Business Relations The company has no commercial relations with Enel Américas S.A. ENEL GREEN POWER CACHOEIRA DOURADA S.A. Company Name Enel Green Power Cachoeira Dourada S.A. Type of Company Limited Liability Company Address Rodovia GO 206, Km 0, Cachoeira Dourada Goiânia Goiás, Brasil Phone (55 62) 3434 9000 Subscribed and paid-in capital (US$ thousand) 19,422.28 Corporate purpose The corporate purpose of the Company is the carrying out of studies, planning, construction, installation, operation and exploitation of electricity generation plants, and the trade related to these activities. Likewise, the company may foster or participate in other societies formed for the production of electricity, in or out of the Sate of Goiás. Core business Electricity generation Directorio Carlo Federico Vladimir Il‘ic Zorzoli (Chairman) Aurelio Ricardo Bustilho de Oliveira Claudia Maria Suanno Senior Management Luigi Parisi (General Manager) Aurelio Ricardo Bustilho de Oliveira Newton Souza de Moraes Matteo de Zan Nelson Ribas Visconti Janaina Savino Vilella Carro Carlos Ewandro Naegele Moreira Ana Claudia Gonçalves Rebello José Nunes de Almeida Neto Anna Paula Hiotte Pacheco Margot Frota Cohn Pires Business Relations The company has no commercial relations with Enel Américas S.A. ENEL GREEN POWER MODELO I EÓLICA S.A.* Company Name Enel Green Power Modelo I Eólica S.A. Type of Company Limited Liability Company. Address Praça Leoni Ramos, Nº 1, 5º andar, bloco 2 Niterói, RJ, Brasil Corporate purpose Wind electricity generation Core business Electricity generation. Administration Newton Souza de Moraes André Bruno Santos Gordon Afonso Márcio Teixeira Trannin Business Relations The company has no commercial relations with Enel Américas. *The shares of Enel Green Power Modelo Eólica I S.A that were formerly owned by Enel Brasil S.A were transferred to Enel Green Power Brasil Participações LTDA, on September 29, 2017, through a shares purchase and sale agreement. ENEL GREEN POWER PROJETOS I S.A (Volta Grande) Company Name Enel Green Power Projetos I S.A Type of Company Limited Liability Company. Address Praça Leoni Ramos, nº 1, 5º andar - parte, bloco 1, São Domingos. Niterói, Rio de Janeiro. Phone (21) 2716-1100 Subscribed and paid-in capital (US$ thousand) 170,784.56 Corporate purpose Its main activity is the generation of electricity, pursuant to the current regulation. Likewise, the company is enabled to commercialize energy by any means and in any market. Core business Electricity generation. The company does not have a Board of Directors. ) ENEL GREEN POWER MODELO II EÓLICA S.A. * Senior Management Leonardo Soares Walter Newton Souza de Moraes Company Name Enel Green Power Modelo II Eólica S.A. Type of Company Limited Liability Company Address Praça Leoni Ramos, Nº 1, 5º andar, bloco 2 Niterói, RJ, Brasil, CEP: 24.210-205 Corporate purpose Wind electricity generation. Core business Wind electricity generation Administration Newton Souza de Moraes André Bruno Santos Gordon Afonso Márcio Teixeira Trannin Business Relations The company has no commercial relations with Enel Américas. *The shares of Enel Green Power Modelo Eólica II S.A that were formerly owned by Enel Brasil S.A were transferred to Enel Green Power Brasil Participações LTDA, on September 29, 2017, through a shares purchase and sale agreement. Business Relations The company has no commercial relations with Enel Américas S.A. ENEL PERÚ S.A.C. Company Name Enel Perú S.A.C. Type of Company Limited Liability Company Address Calle César López Rojas 201, Urb. Maranga, San Miguel Lima, Perú Subscribed and paid-in capital (US$ thousand) 1,656,474.44 Corporate purpose Perform investments in other companies, most preferably in those involved in the exploitation of natural resources, and especially those related to the distribution, transmission and generation of electricity. Develop engineering services for the construction of power plants; perform activities related to the supply, 175 Identification of Subsidiaries and Associate Companiesassembly and commissioning of equipment and/ or services for electricity generation. Additionally, the company may carry out any other activity related to the electricity and water sectors. The company may also make equity investments in any kind of property including stocks, bonds and any other class of transferable securities, as well as the administration of such investments within the limits set by the board and ordinary shareholders meeting. The activities that are considered within the purpose of the company may be carried out in Peru and abroad. Core business Investment Company. Ejecutivos principales Carlos Temboury Molina General Manager Business Relations The company has no commercial relations with Enel Américas S.A. ENEL SOLUÇÕES S.A. Company Name ENEL SOLUÇÕES S.A. Type of Company Limited Liability Company constituted pursuant to the Brazilian law. Address Praça Leoni Ramos nº 01 Parte, São Domingos, Niterói, Rio de Janeiro, Brasil. Phone (55 21) 2613 7000 Subscribed and paid-in capital (US$ thousand) 15,869.96 Corporate purpose The company’ objective is to participate in the capital of other companies in Brazil or abroad, trade in general, even imports and exports, through retail or wholesale transactions of various products, and to provide general services for the energy electricity sector and others. Core business Provision of services in general to the electricity industry and others. The company does not have an administration council (Board of Directors) Senior Management Marcio Teixeira Trannin Tennessee Williams Pearce Maia Rafael Felipe Coelho da Silva Business Relations The company has no commercial relations with Enel Américas S.A. 176 ENEL TRADING ARGENTINA S.R.L. Company Name Enel Trading Argentina S.R.L. Type of Company Limited Liability Company Address San José 140, piso 6, CABA Buenos Aires, Argentina Phone (5411) 4124-1600 Subscribed and paid-in capital (US$ thousand) 733 Corporate purpose The purpose of the company is the wholesale purchase and sale of electricity capacity and energy produced and/or consumed by third parties, including the import and export of electricity power and energy and the marketing of royalties, and the supply and/or performing of services related to the above activity, both in the country as well as abroad of information technology services and/or of control of the operation and/or of telecommunications. Likewise, the Company shall be entitled to execute buy/sell operations or to purchase and sell natural gas, and/or its transportation, including the importation and/or exportation of natural gas and/or the marketing of regalia/privileges, as well as to provide and/or execute services related to the abovementioned activity. Also, the Company shall be entitled to execute buy/ sell operations or to purchase and sell crude petroleum, and/or lubricants and/or to transport such elements, including the importation and/or exportation of liquid fuels and the marketing of regalia/privileges, as well as to provide and/or execute services related to the aforementioned activity. Core business Trading of electricity, gas and derivatives. IT services and/or operation control and/or telecommunications. Gerentes titulares Maurizio Bezzeccheri Paolo Giovanni Pescarmona Gerentes suplentes Mónica Diskin Gaetano Salierno Senior Management Livio Filippo Colasanto General Manager Business Relations The company has no commercial relations with Enel Américas S.A. EÓLICA FAZENDA NOVA * Company Name Eólica Fazenda Nova o Geraçãoa e Comercialização de Energia S.A. Type of Company Limited Liability Company Address Rua Felipe Camarão, nº 507, sala 104 Ciudad de Natal, Rio Grande do Norte, Brasil Phone (5521) 3607 9500 Corporate purpose Generation, transmission, distribution and trading of energy, participation in other companies as a partner, shareholder, or quota holders and import machinery and equipment related to the generation, transmission, distribution and trading of wind energy. Core business Electricity generation. Administration Márcio Teixeira Trannin (General Manager) Leonardo Soares Walter Business Relations The company has no commercial relations with Enel Américas S.A. *Enel Brasil S.A absorbed the company. on September 21, 2017. GENERANDES PERÚ S.A. * Company Name Generandes Perú S.A. Type of Company Publicly Traded Company Address Calle César Lopez Rojas 201 N° 201, Urb. Maranga, San Miguel Lima, Perú Phone (511) 215 6300 Corporate purpose The company has the purpose to develop activities related to electricity generation, directly, or through companies created for that purpose . Core business: Investment Company. * Enel Perú S.A.C absorbed the company on April 28, 2017. Annual Report Enel Américas 2017HIDROINVEST S.A. Company Name Hidroinvest S.A. Type of Company Sociedad Anónima Address Avda, España 3301 Buenos Aires, Argentina Phone (5411) 4307 3040 Subscribed and paid-in capital (US$ thousand) 18.869,66 Corporate purpose Acquire and maintain a majority shareholding in Hidroeléctrica Alicura S.A. and/or Hidroeléctrica El Chocón S.A. and/or Hidroeléctrica Cerros Colorados S.A. (“the concessionaire companies”) created by National Executive Power decree 287/93 and manage such investments. Core business Investment Company. Regular Directors Mauricio Bezzeccheri (Chairman) Gaetano Salierno (Vice Chairman) Mónica Diskin Alternate Directors María Victoria Ramírez Business Relations The company has no commercial relations with Enel Américas S.A. INGENDESA DO BRASIL Ltda. (Company under liquidationn) Company Name Ingendesa do Brasil Ltda. Type of Company Limited Liability Company Domicilio Praça Leoni Ramos, Nº 1 Parte, São Domingos Niterói - RJ, Brasil Subscribed and paid-in capital (US$ thousand) 747.65 inspection and reception of materials and equipment for laboratories, appraisals, commercial representation of local and foreign engineering companies, as well as other services that the legal powers permit in the practice of the professions of engineering, architecture, agronomy, geology and meteorology in all their specialties. Core business Engineering services. Representative Bruno César Vasconcelos Business Relations The company has no commercial relations with Enel Américas S.A. INVERSIONES DISTRILIMA S.A.C. * Company Name Inversiones Distrilima S.A.C. Type of Company Limited Liability Company Address Calle César López Rojas 201, Urb. Maranga, San Miguel Lima, Perú Phone (511) 561 1604 Corporate purpose Perform investments in other companies, most preferably in those Involved in the exploitation of natural resources, and especially those related to the distribution, transmission and generation of electricity. In order to perform according to its purpose and practice the activities related to it, the company may perform all actions and enter into all contracts that the Peruvian laws allow to corporations. The company may also make equity investments in any kind of property including stocks, bonds and any other class of transferable securities, as well as the administration of such investments within the limits set by the board and ordinary shareholders meeting. The activities that are considered within the purpose of the company may be carried out in Peru and abroad. * Enel Perú S.A.C absorbed the company on April 28, 2017. INVERSORA CODENSA S.A.S. Corporate purpose Offer services in engineering, studies, projects, technical consulting, management, inspection and supervision of works supply, Company Name Inversora Codensa S.A.S. Type of Company Sociedad por acciones simplificada Address Carrera 11 N°82-76, Piso 4 Bogotá, Colombia Phone (571) 601 6060 Subscribed and paid-in capital (US$ thousand) 1.67 Corporate purpose Investment in residential public electric utility services, especially the acquisition of shares in any public electric utility or in any other company that also invests in utilities whose main purpose is residential electricity service according to the definition in Law 142 of 1994, or in any other company that also invests in utilities whose main purpose is residential public electric utility services. Core business Investment Company. Senior Management David Felipe Acosta Correa Manager Leonardo Lopez Vergara First Deputy Manager Juan Manuel Pardo Gómez Second Deputy Manager Business Relations The company has no commercial relations with Enel Américas S.A. INVERSORA DOCK SUD S.A. Company Name Inversora Dock Sud S.A. Type of Company Limited Liability Company Address Avenida Debenedetti 1636 Dock Sud Avellaneda Phone 4229-1000 Subscribed and paid-in capital (US$ thousand) 41,793.93 Corporate purpose The corporate purpose of the company is the participation in companies of any nature, by means of creating shareholding companies, transitory company ventures, collaboration groups, joint ventures, consortiums and any other kind of association, and in general, the purchase, sale and negotiation of titles, shares and all other kind of securities and credit papers in any of the systems or modes created or to be created. Core business Investment Company. 177 Identification of Subsidiaries and Associate CompaniesRegular Directors Mauricio Bezzeccheri (Chairman) Paolo Pescarmona (Vice Chairman) Hector Martin Mandarano Santiago Matías Sajaroff Mónica Analía Ciacciarelli Antonio Ascione Alternate Directors (Enel’s vacant position) Mónica Diskin Gaetano Salierno Raúl Ángel Rodríguez Patricio Cipollone María Eugenia Pardo Regular Directors Roberto De Antoni Nagelo Cefalu Daniel Flaks Eduardo Maggi Alternate Directors Fabio Canosa Leonardo Lintura Miguel Patricio Farrell José Luis Marinelli Senior Management Francisco Cerar General Manager Business Relations The company has no commercial relations with Enel Américas S.A. Business Relations The company has no commercial relations with Enel Américas S.A. SACME S.A. Company Name Sacme S.A. SOCIEDAD PORTUARIA CENTRAL CARTAGENA S.A. Type of Company Limited Liability Company Company Name Sociedad Portuaria Central Cartagena S.A. Address Avda, España 3251 Ciudad Autónoma de Buenos Aires, Argentina Phone (5411) 4361 5107 Subscribed and paid-in capital (Argentinean Pesos) 1,569 Corporate purpose Conduct, supervise and control the operation of the electricity generation, transmission and sub transmission system of Capital Federal and Gran Buenos Aires, and the interconnections with the Argentine Interconnection System (SADI in its Spanish acronym). Represent the companies Distribuidora Edenor S.A. and Edesur S.A. in terms of operations, before the wholesale market administrator, Compañía Administradora del Mercado Mayorista Eléctrico (CAMMESA in its Spanish acronym. In general, adopt all actions necessary to allow it to carry out the administration of the business correctly, as being constituted for this purpose by the concessionaire companies of the electricity distribution and trading in Capital Federal and Gran Buenos Aires, all in accordance with the international public tender for the sale of Class A shares in Edenor S.A. and Edesur S.A. and applicable regulations. Core business Lead, supervise and control of operations from the Argentine electricity system. Type of Company Publicly Traded Company Address Carrera 13 A No. 93-,66, piso 2 Bogotá, D.C. Colombia Subscribed and paid-in capital (US$ thousand) 1.94 Corporate purpose The company’s main purpose is the following: investment, construction and maintenance of docks and private and public ports, their management and operations and the development and operation of a multipurpose port, in accordance with the law, among others. Regular Directors Bruno Riga Leonardo Lopez Vergara Juan Manuel Pardo Alternate Directors Fernando Javier Gutierrez Medina Alba Lucia Salcedo Luis Fernando Salamanca Senior Management Fernando Gutierrez Medina General Manager Bruno Riga First Deputy General Manager Oswaldo Rafael Novoa Arroyo Second Deputy General Manager Business Relations The company has no commercial relations with Enel Américas S.A. 178 TERMOELÉCTRICA JOSÉ DE SAN MARTÍN S.A. Company Name Termoeléctrica José de San Martín S.A. Type of Company Publicly Traded Company Address: Elvia Rawson de Dellepiane 150, piso 9, Buenos Aires, República de Argentina Phone: (54 11) 4117-1011/1041 Subscribed and paid-in capital (US$ thousand) 53.65 Corporate purpose The generation of electricity and its block trading, and particularly the management of the equipment, construction, operation and maintenance of a thermal plant in accordance with the “Definitive agreement for the management and operation of the projects for the re-adaptation of the MEM in the terms of Resolution SE N° 1427/2004”, approved by Resolution SE N° 1193/2005. Core business Electricity generation. Management services (acquisition of equipment, construction, operation and maintenance of a thermal power plant). Regular Directors Ricardo Arakaki Adrián Gustavo Salvatore Andrea Biasotto Mónica Diskin Martín Genesio Emiliano Chaparro Gerardo Carlos Paz José Manuel Tierno Jorge Ravlich Alternate Directors Leonardo Pablo Katz Leonardo Marinaro Fernando Antognazza Iván Durontó Julián McLoughlin Luís Agustín León Longobardo Sergio Raúl Sánchez Rodrigo García Antonino Ascione Senior Management Ricardo Arakaki General Manager Business Relations The company has no commercial relations with Enel Américas S.A. Annual Report Enel Américas 2017TERMOELÉCTRICA MANUEL BELGRANO S.A. TESA Company Name Transportadora de Energía S.A. Company Name Termoeléctrica Manuel Belgrano S.A. Type of Company Sociedad Anónima Corporate purpose Construction, operation and maintenance of the first electrical link between Yacyretá Hydroelectric Plant and the Resistance’s Transformation Station, and provision of electricity transmission services, including the exploitation under concession as independent transporter. Type of Company Publicly Traded Company Domicilio Suipacha 268, piso 12 Buenos Aires, Argentina Phone (5411) 3 221 7950 Subscribed and paid-in capital (US$ thousand) 31.47 Corporate purpose The company’s purpose is the generation of electricity and its block trading, and particularly the management of the equipment, construction, operation and maintenance of a thermal plant in accordance with the “Definitive agreement for the management and operation of the projects for the re-adaptation of the MEM in the terms of Resolution SE N° 1427/2004”, approved by Resolution SE N° 1193/2005. Core business Management services (acquisition of equipment, construction, operation and maintenance of a thermal power plant). Electricity generation. Regular Directors Martín Genesio Emiliano Chaparro Adrián Gustavo Salvatore José Manuel Pazos Antonino Ascione Mónica Diskin Gerardo Carlos Paz José Manuel Tierno Vacant position Alternate Directors Guillermo Giraudo Julián Mc Loughlin Gaetano Salierno Vacant position Leonardo Marinaro Leonardo Pablo Katz Luis Agustín León Longobardo Sergio Raúl Sánchez Rodrigo García Senior Management Francisco Monteleone General Manager Business Relations The company has no commercial relations with Enel Américas S.A. Address Bartolomé Mitre 797, 11th Floor Buenos Aires, Argentina Phone (5411) 4394 1161 Subscribed and paid-in capital (US$ thousand) 5.23 Corporate purpose High tension electricity transmission services’ provision, linked to both national and international electrical systems, for which purpose it may participate in national and international tenders, become a high tension electricity transmission utilities concessionaire, locally or abroad, and carry out all activities deemed necessary to fulfill its purpose. Core business Electricity transmission. Regular Directors Juan Carlos Blanco (Chairman) Paolo Giovanni Pescarmona (Vice Chairman) Mónica Diskin Alternate Directors Gaetano Salierno Angelo Cefalu Senior Management Sandro Ariel Rollan General Manager Business Relations The company has no commercial relations with Enel Américas S.A. YACYLEC S.A. Company Name Yacylec S.A. Type of Company Limited Liability Company Address Bartolomé Mitre 797, 11th Floor; Buenos Aires, Argentina Phone (5411) 4587 4322/4585 Subscribed and paid-in capital (US$ thousand) 1,258.72 Core business Electricity transmission. Regular Directors Jorge Guillermo Neira (Chairman) Juan M. Pereyra (Vice Chairman) Juan Carlos Blanco Paolo Giovanni Pescarmona Gerardo Ferreyra Osvaldo Acosta Guillermo Díaz Eduardo Albarracín Rafaelle Sardella Luis Juan B. Piatti Mónica Diskin Marisa Varela Toba Alternate Directors Gaetano Salierno Carlos Fernando Bergoglio Juan José Arena Gianfranco Catrini Massimo Villa Roberto Leonardo Maffioli Darío Ballaré Sergio Alejandro Vestfrid Angelo Cefalu Robert Ortega Alberto E. Verra Ejecutivos principales Sandro Ariel Rollan General Manager Business Relations The company has no commercial relations with Enel Américas S.A. Notes: 1. There are no acts or agreements signed by Enel Américas with its subsidiaries or associated companies that could significantly influence its operations and results. 2. With regards to the business relations, future relations planned with subsidiaries or associated companies fall within the company’s corporate purpose, especially continuing to provide its subsidiaries and associated companies with the necessary financial resources for their businesses’ development and, additionally, to provide its subsidiaries with management, financial advisory, business, technical, legal, audit services and, in general, services of any kind deemed necessary for their best performance, notwithstanding which, it is not foreseen that any of these connections would significantly influence Enel America’s operations and results. 179 Identification of Subsidiaries and Associate Companies21Statement of Responsibility 180 Annual Report Enel Américas 2017181 Letter from the Chairman182 Annual Report Enel Américas 2017Statement of Responsibility The Directors of Enel Américas S.A. and the Chief Executive Officer, signatories of this statement, are responsible under oath of the veracity of the information provided in this Annual Report, in compliance with the General Norm N°30, issued by the Superintendence of Securities and Insurances. CHAIRMAN Borja Acha Besga DNI: 05263174-S DIRECTOR José Antonio Vargas Lleras DNI: 79,312,642 DIRECTOR Hernán Somerville Senn Rut: 4,132,185-7 DIRECTOR Patricio Gómez Sabaini Passport: 16941675N DIRECTOR Livio Gallo DNI: AV 0246369 DIRECTOR Domingo Cruzat Amunátegui Rut: 6,989,304-K DIRECTOR Enrico Viale DNI: AU 2580379 CHIEF EXECUTIVE OFFICER Luca D’Agnese Rut: 24,910,349-7 Statement of Responsibility 183 184 Annual Report Enel Américas 2017ADMINISTRATION CHAIRMAN Borja Acha Besga PHONE (56) 2 2263 4631 DIRECTOR José Vargas Lleras PHONE (56) 2 2353 4631 DIRECTOR Enrico Viale PHONE (56) 2 2353 4631 DIRECTOR Livio Gallo PHONE (56) 2 2353 4631 DIRECTOR Hernán Somerville Senn PHONE (56) 2 2353 4631 DIRECTOR Domingo Cruzat Amunátegui PHONE (56) 2 2353 4631 DIRECTOR Patricio Gómez Sabaini PHONE (56) 2 2353 4631 CHIEF EXECUTIVE OFFICER Luca D’Agnese PHONE (56) 2 2263 9130 COMMUNICATIONS OFFICER José Miranda Montecinos PHONE (56) 2 2675 2746 INTERNAL AUDIT OFFICER Raffaele Cutrignelli PHONE (56) 2 2353 4647 CHIEF FINANCIAL OFFICER Paolo Pallotti PHONE (56) 2 2353 4510 PLANNING AND CONTROL OFFICER Emanuele Brandolini PHONE (56) 2 2353 4510 GENERAL COUNSEL Domingo Valdés Prieto PHONE (56) 2 2630 9227 INVESTOR RELATIONS HEAD OF INVESTOR RELATIONS Rafael De La Haza Casarrubio PHONE (56) 2 2353 4682 CITIBANK NY Teresa Loureiro-Stein PHONE (1-212) 816 6814 enelamericas.com

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